Equity ETF

What are Equity ETFs?

Equity ETFs in India are quite popular marketable securities traded on stock exchanges. They are built to replicate the performance of popular indices (such as Nifty 50 or Sensex) by holding stocks in similar proportions. These funds combine the ease and convenience of equity trading with the diversification benefits of mutual funds.

You can trade an equity ETF on the stock exchange, making it a highly liquid asset. The brokerage and commissions are low, and these can be used to create long-term wealth, providing equity market exposure to investors without the need to select individual stocks.

Who Should Invest in Equity ETFs?

Here is a list of investors who can invest in Equity ETFs:

1. Beginners: If you are just starting your portfolio-building journey, an Equity ETF can be an excellent idea. Equity ETFs provide access to broad indices of your interest and eliminate the need for selecting individual stocks, especially during the early months of your investment process.
2. Investors with a Long-Term Vision: If your portfolio aims to attain significant life goals, such as building a pension corpus, including Equity ETFs can be a good idea, as they will help you earn consistent returns, compounding, and tax efficiency.
3. Investors Seeking Diversification: Equity ETFs spread risk across many stocks and sectors, reducing company-specific risk and mirroring overall market performance. For example, you can invest in Nifty Next ETF, thereby tapping the potential of ‘next big things’ in the Indian market.
4. Thematic and Sector-Focused Investors: Investors targeting specific themes (e.g., EV, consumption) can use thematic ETFs. For example, you can invest in the Nifty IT ETF that includes top listed IT shares in India.
5. Investors Seeking Liquidity: Unlike conventional mutual funds, ETFs are tradeable on the stock exchanges, allowing intraday trades, limit orders, and easy exits.

Benefits of Investing in Equity ETFs

Here are the most important benefits of investing in Equity ETFs:

1. Flexibility: You can buy and sell them just like stocks, and hence get instant access and settlements.
2. Transparent Holdings: ETFs typically disclose their portfolios daily, giving investors full visibility into the assets they own.
3. Single Trade Diversification: You can add diversity to your portfolio with a single trade rather than picking and choosing multiple equity stocks.
4. Customised Trades: For intraday traders, it is possible to customise trades with limit and intraday orders.
5. Passive and Thematic Investing: This strategy is perfect for investors who track broad indices, specific sectors, or global themes easily and at scale.

How to Invest in Equity ETFs?

Here is a step-by-step guide to start your Equity ETF Investment journey:

• Login (or Register): If you have an Upstox account, simply log in or register for a free account.
• Research for Equity ETF: Once you log in, you will see a number of Equity ETFs from the Indian markets, each depicting a different index or sector. You need to research which index or sector interests you the most.
• Fund Selection: Select from the list of best Equity ETFs in India per your investment requirements.
• Investment Type: You can choose between a lump-sum investment or an SIP, depending on your financial preferences.
• Make the Payment: Buy in real time on the exchange using a market or limit order, or via SIP/lump-sum options.
• Monitor and Manage:   Keep track of your investment’s performance after it is added to your portfolio.