Decoding the world of Exchange Traded Funds or ETFs

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.