Posted at 4:41 PM , on October 14, 2016
Exchange Traded Funds (ETFs) are one of the best forms of investing passively in a variety of asset classes. When we say passive investing, we are referring to a situation where there are no active fund managers sitting and taking buy/sell decisions. To that extent, the expense ratio in an ETF is substantially lower compared to a normal equity fund. Over a longer period of time, this lower expense ratio adds up to quite a bit. You have ETFs on gold, silver and also on indices like the Nifty and Sensex. An ETF differs from a typical mutual fund in the sense that an ETF is a listed security like a stock. On the contrary, mutual funds have to be redeemed with the AMC and therefore any purchase or sale impacts the AUM of the fund. On the contrary, in case of ETF buyers and sellers the AUM of the fund does not get impacted as these are market transactions. Continue reading
Posted at 11:25 AM , on April 21, 2015
After almost getting within striking distance of their all-time highs, the Nifty and Sensex fell vertically over the last 3 trading days of the week. Why exactly did they fall so rapidly and what were the triggers? There are 4 such triggers!
It is all about the ETFs…
Exchange Traded Funds (ETFs) are powerful global passive investors. Passive in the sense, they don’t bother about outperforming stocks, and specific stock performances. They just buy the index if they like a particular market. Since the beginning of March 2015, over 85% of the money that came in was in the form of passive ETF money. Just as the ETF buys all stocks in the index in the ratio, it does the same when selling. These ETFs are typically driven by news and valuations. Not surprisingly, they hit the 2 high/PE sectors viz. Pharma and Technology. To combine with rich valuations there was cross currency risk. Continue reading