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Don't have a demat account to invest in ETF? Try FOFs for passive investing

Ease of investing via SIPs, easy liquidity and no requirement of a demat are advantages that FOF have over exchange traded funds

May 29, 2021 / 03:19 PM IST

The low liquidity in ETFs (exchange traded funds) means that often the price quoted is at wide variance to the NAV (net asset value) of the scheme. Can fund of funds (FOF) help get over this shortcoming?

Demat account not needed

To transact in ETFs, you need broking and demat accounts. All those without a broking or demat account can opt for the fund of fund route.

Fund of funds purchase the units of the feeder ETF. For example, Mirae Asset ESG Sector Leader Fund of Fund purchases units of Mirae Asset ESG Sector Leaders ETF.