This time too we have an exciting topic, Investing in Equities through the ETFs. Sharing their knowledge and expertise with us are Mr Siddharth Srivastava, Head - ETF Products, Mirae Asset investment Managers (India) Pvt. Ltd. and Mr Puspendu Datta, Investment Advisor, iFAST Global Markets.
They opened the discussion with stating that there are more than 100 ETFs in India based on sector, industry and international markets giving vibrancy to the market scene. Defining the characteristics of ETFs, Mr Srivastava explained how ETFs are method driven and a low exposure investment. They tend to focus on areas where mutual funds are not present or where active mutual funds are underperforming.
Mr Puspendu brought a similar line of thinking and said, “ETFs make decision making easier as they follow the index so there isn’t much of a style drift. The investor knows the intention of the product”.
The discussion then progressed to the actual asset allocation in ETFs and here it was noted that there are two visible trends. First, one of the most significant benefits of Fintech is the creation of model portfolios through ETFs. Investors can subscribe to these platforms and start saving for their future with SIPs in these portfolios. These have been created by financial experts and mutual fund managers, but it's important to understand how each one is made and how they compare to each other.
The second trend is that in order to provide investors with exposure to both ETFs and index funds, an increasing number of AMCs are starting to use the fund-of-funds model. This is ideal for people who do not have an Demat account and might not want to do asset allocation on their own.
Finally, the discussion ended with a few dos and don’ts when it comes to investing in ETFs. If you have access to information then you can pick and choose ETFs wisely from more efficient segments. If you do not, then going for a fund of funds or a model portfolio is a more suitable approach. However, to make the right choice, you still need to understand how these models are created and if they align with your goals and risk profile.So, start your investment journey through ETFs now by watching this insightful discussion here.