Why is ETF investment not that popular (compared to mutual fund) in India?

gauharjk

Well-Known Member
#2
The difference between a Mutual Fund and ETF is very blurry... They seem almost similar...
 

AW10

Well-Known Member
#3
IMO, major difference in the liquidity. ETF can be traded at the auction price given by market at any moment (very similar to stock), whereas in case of mf, there is only one settlement price for the day which is NAV. And in all case, we don't know what will be NAV at the end of the day.

Yes, ETF are passively managed fund that tracks the benchmark. But when almost 85% of the funds are underperforming the benchmark, then why to goto mf manager and pay additional charges.

As etf industry matures, we will looking for etf that can go short on index, can perform 2x, 3x time (leveraged etfs) the indices. As investors get more knowledgable and don't depend on agents recommendation, we will start seeing the change. Ofcourse western market is few years ahead of us, but it is coming to india too.

Happy ETF Trading.
 

milind

Active Member
#4
Apart from that, do you think in future ETF will become preferred investment compared to mutual fund (in India)?
Many managed funds outperform market in India, unlike in US and other developed countries. Liquidity, and transaction costs couple of other reasons.
 
#5
If I understand correctly, ETFs are similar to stocks. I will have to do research and decide when to invest and when to redeem units.
If that is true, I guess ETFs are not really for me. I am busy with my job and do not have enough time to spend for research. Then will it not be better to go for mutual fund where the research is done by the fund manager and his team? In fact if I am able to do research and invest accordingly, why should I not go for stock market directly?
 
#6
ETFs are good for a developed, mature and transparent market.

In India, a fund manager is not only required to generate alpha but also to protect against the downside. Our markets are far from transparent and technical analysis alone is not enough.
 

AW10

Well-Known Member
#7
Fund mgrs can't protect u against downside. their hands are tied cause due to mandate of their fund, they can't goto 100% cash. They have to remain invested and see the nav falling.

With improved financial awareness of investor, it is matter of time before etf takes over our fund mgmt industry too (like it has done in west).

happy trading.
 

Subhadip

Well-Known Member
#8
Fund mgrs can't protect u against downside. their hands are tied cause due to mandate of their fund, they can't goto 100% cash. They have to remain invested and see the nav falling.

With improved financial awareness of investor, it is matter of time before etf takes over our fund mgmt industry too (like it has done in west).

happy trading.
great reply:thumb:
 

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