Relying on a single investment vehicle is a recipe for disaster. Diversification helps ride over the uncertainty that comes with different investment instruments and should be practised by all types of investors. There’s no shortage of investment schemes that you can invest in; from mutual funds to REITs and the share market, all these schemes that rapidly multiply your money. In this article, we’ll introduce ETFs and help you invest in the best ETFs in India.
What are Exchange Traded Funds?
Exchange Traded Funds (ETFs) are investment instruments that are similar to mutual funds. ETFs simply replicate an underlying index or commodity to grow your money at a slow but steady rate. ETFs are actively traded on the stock exchanges, which means you can buy and sell them whenever you want.
Unlike mutual funds, ETFs do not have any minimum lock-in period. Since they’re not actively managed by a fund manager, ETFs do not incur the same fees and expenses as mutual funds.
Best ETFs to invest in 2021
Here are some of the best ETFs that you can invest in India today:
- Nippon India ETF Junior BeES
The Nippon India ETF Junior Bees ETF holds stocks like Avenue Supermarts, Adani Green Energy, Tata Consumer Products, Info Edge (India), and Dabur India. So it has a diversified portfolio, with 68% investment in large-cap stocks, 26.1% in mid-cap stocks, and 4.9% in small-cap stocks. Launched in February 2003, this ETF is more than 10 years old and has an expense ratio of 0.15%. The fund currently has Assets under Management (AUM) of ₹1,408 crores.
- Motilal Oswal Nasdaq 100 ETF
If you want exposure in the American markets, go with Motilal Oswal Nasdaq 100 ETF. The fund mainly invests in shares of US Equity companies like Apple, Tesla, Microsoft, Amazon, Google, Netflix, PayPal, and Nvidia. More than 12% of its holding is in Apple, which is arguably the biggest company in the world. The fund has a low expense ratio of 0.5% per annum and doesn’t have any entry/exit load.
- Nippon India ETF Gold BeeS
Many investors prefer investing in gold. It makes sense as well since gold has proven to be a multibagger in the last few decades. The Nippon India ETF Gold BeeS offers good exposure to the yellow metal without asking for heavy investment at the beginning. You can start a SIP in this ETF and slowly grow your gold portfolio. The ETF offers returns that are in line with returns of physical gold. You can, alternatively, also consider investing in the Sovereign Gold Bond (SGBs) schemes offered by the Government of India.
- Nippon India ETF Bank BeeS
The financial sector is always a safe bet, and that makes the Nippon India ETF Bank Bees an interesting proposition. The ETF invests in shares of banks and financial Services listed on the NSE. It has exposure to both private as well as PSU banks, holding considerable shares of HDFC Bank, ICICI Bank, SBI, IDFC First Bank, Kotak Mahindra Bank, and so on.