2.Benefits Of Investing In An ETF
Flexibility to trade: ETFs can be traded throughout the day on the stock exchange like individual stocks and hence provide liquidity to the customers.
Lower Costs: ETFs are listed on the stock exchange and generally have a less expense ratio than most mutual funds
Simple structure: ETFs are simple in structure and easy to understand.
Tax Efficiency: ETFs generally generate relatively low capital gains, because they typically have low turnover of their portfolio securities.
Diversification: Investments in ETFs are widely diversified as indices are construed to represent performance of the stock market as a whole.
There are several criteria that one should look at while choosing the right ETF for their portfolio. Some of them are: Cost: Expense ratios can vary greatly even among ETFs tracking the same market. Everything else being equal, choose the ETF with the lower expense ratio, because costs directly affect your returns.
Benchmark?When choosing an ETF, first decide on the market, market segment, or industry sector you wish to track, and then decide on the appropriate index for that market. Each index provider has its own construction methodology, resulting in wide variations in turnover and other portfolio characteristics. Benchmarks tracking the same market segment can deliver very different results.
Management team: Index funds are not created equal. Effective, efficient portfolio management skills can make a difference, often offsetting marginal differences in costs between two indexed products. Review the experience and track record of the fund managers. Through Ez Wealth?s platform, you can buy/sell any of the 100+ available mutual fund schemes from more than 5 mutual fund houses.
