how ETF works in India

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how ETF works in India

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What is ETF and how it works in India?

ETF stands for Exchange-Traded Fund, which is a type of investment fund that tracks a basket of underlying assets such as stocks, bonds, commodities, or a combination of these assets. ETFs are bought and sold on stock exchanges just like individual stocks.

In India, ETFs are regulated by the Securities and Exchange Board of India (SEBI) and can be bought and sold on the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE).

ETFs work by pooling together the investments of many individuals and investing the funds in a diversified portfolio of assets. The value of an ETF is determined by the combined value of its underlying assets, and the price of an ETF share is updated in real-time on the stock exchange.

Investors can buy and sell ETF shares just like they would buy and sell individual stocks, through a Demat and trading account. ETFs offer the benefits of professional management and lower fees compared to traditional actively managed funds, while also providing diversification and the ability to trade on stock exchanges.

Please note that investing in ETFs, like any other investment, carries risk, and it’s important to understand the nature of the investment, the underlying assets, and to seek professional advice if needed.

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