International ETFs India

An Exchange Traded Fund, or ETF, is a basket of securities that tracks an index, commodity or theme and trades on the NSE and BSE like a normal stock. You buy and sell units through a demat and trading account at live market prices during the trading session. Most Indian ETFs are passive, aiming to mirror an index such as the Nifty 50 rather than beat it.

Both pool investor money, but an ETF trades on an exchange in real time at market price, whereas a mutual fund is bought and sold once a day at NAV directly with the fund house. ETFs require a demat account and usually have lower expense ratios, while mutual funds allow SIPs and fractional amounts more easily. ETF prices can differ slightly from NAV due to demand and supply.

Tracking error measures how closely an ETF follows its underlying index. It is the difference between the ETF's returns and the index returns over a period. A low tracking error means the fund is doing its job of replicating the index faithfully. It arises from the expense ratio, cash holdings, dividend timing and trading costs, so investors often prefer ETFs with consistently low tracking error.

Gold ETFs let you invest in gold in electronic form, with each unit typically backed by physical gold of high purity held by the fund. They trade on the NSE and BSE, so you avoid the storage risk, making charges and purity concerns of physical gold. Prices track domestic gold rates closely. They are held in your demat account and can be bought or sold during market hours.