Module 11   Personal Finance (Part 1)Chapter 29

Exchange-traded funds (ETF)

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Please note, this is a guest chapter, and I’ve not authored this. This chapter on ETFs is authored by my colleague, Bhuvan. However, I’ll try and answer all the follow on queries that you’d post. 

Happy learning, 

-Karthik Rangappa. 

29.1 – Overview 

In chapter 7, we looked at what a mutual fund is and how it works. To recap, a mutual fund is a pooled investment vehicle that collects the money from various investors, invests and manages that money on their behalf. When you invest in a mutual fund before the order placement cut-off time, you will get the units as per the same day’s NAV which is disclosed by midnight. If you invest after the order placement cut-off time, you’ll get the allotment of units per the next day’s NAV. Basically, everything happens at the end of the day.

Now, what if those mutual funds units could be traded on the stock exchange just like stocks like Reliance or Infosys? Just like a mutual fund, an exchange-traded fund (ETF) is a pooled investment vehicle that holds a basket of securities like stocks, bonds, and commodities and trades on the stock exchanges. You can buy and sell an ETF anytime, just like a stock.

There are a few more nuances to an ETF than a mutual fund, but before we dive in, I hope you have a working idea of what an ETF is.

29.2 – History of ETFs

Mutual funds have been around in some form for well over 100-years. The first open-ended mutual fund in the US was launched in 1924 and is still in existence today. The first mutual fund in India was launched in 1964. Mutual funds have democratized access to stocks, bonds, real estate and commodities globally to common investors. Exchange-traded funds (ETF) were the next evolution of mutual funds.

ETFs, on the other hand, are relatively new. The SPDR S&P 500 trust, arguably the first ETF, was launched in 1993 in the US. Coincidentally, it is today the largest traded security in the world. NiftyBeES an ETF tracking the Nifty 50 index was the first ETF in India and was launched in 2002. It was launched by Benchmark AMC, which Goldman Sachs later acquired, which Reliance later acquired, which Nippon India Mutual Fund later acquired 🙂

29.3 – ETFs in India

Though ETFs have been around for a while in India, they haven’t really popular among retail investors. ETFs, have mostly been used by HNIs and institutions. For example, the SBI Nifty 50 ETF with Rs 89,441.55 cr is the largest mutual fund in India. This is almost entirely because this is one of the ETFs in which the Employees’ Provident Fund Organisation (EPFO) invests.

A large part of the ETF AUM growth is due to:

  • EPFO investing in Nifty & Sensex ETF
  • Government divestment through CPSE ETF and Bharat 22 ETF
  • Introduction and the Govt push for Bharat Bond Debt ETFs. Most of the AUM in these ETFs is non-retail.

Growth of ETF AUM in India

Though still a small piece of the pie, the retail participation has been growing steadily over the years and so has the trading turnover on the exchanges.

NiftyBeES which is 20 years old, just has about Rs 2800 crores of AUM. There are a lot of reasons for the under penetration of ETFs:

  1. India is still a tiny market. We just have about 1.7 crore active demat accounts, and unlike a mutual fund, you can only buy an ETF if you have a demat account.
  2. Investment products, be it mutual funds or ETFs are push products. One of the reasons why mutual funds are larger than ETFs is because AMCs can pay distributors & platforms commissions to sell their mutual funds. But ETFs don’t have commissions like mutual funds.
  3. ETFs are also relatively trickier to understand initially compared to mutual funds. But we’ll take care of that with this chapter.
  4. Most AMCs, rarely push ETFs because they have low margins and don’t make sense with small AUMs.

29.4 – What is an ETF?

An exchange-traded fund (ETF), just like a mutual fund is a basket of securities, but this is where the similarity with a mutual fund ends. Unlike a mutual fund, an ETF trades throughout the day on the stock exchanges. You can buy and sell an ETF anytime you want just like a stock.

For example, if you search for “Nifty ETF” on Kite, you’ll see a list of all ETFs that track the Nifty 50 index.

Searching ETFs on Kite

29.5 – How does an ETF work?

When you buy a mutual fund, the AMC takes money from you and buys the securities and discloses the NAV at the end of the day. Similarly, when you redeem your mutual funds, the AMC sells the securities and returns your money. This is quite straightforward. However, when you buy an ETF, you don’t really interact with the AMC most of the times because most buying and selling happens on the stock exchanges. It’s just an exchange of units between buyers and sellers.

29.6 – Creation and redemption mechanism

I said when you buy an ETF, you “mostly” don’t interact with the AMC and I’ll explain what that means. If you remember chapter 6, we discussed all the entities involved in an MF transaction — the AMC, custodian and the RTA. But what makes an ETF unique is something called the creation and redemption mechanism. But before we talk about it, you need to know a couple of things.

  1. NAV, iNAV, the market price
  2. Market makers and authorized participants
  3. Creation units
  4. Premiums & discounts
  5. Tracking error

Market price

When you buy a mutual fund, you look at the NAV. Similarly, when you are buying an ETF, you look at the ETF market price on Kite.

ETF prices

These prices are determined by the demand, supply and the trading activity on the exchanges. But how do you know if the price you see on Kite is the fair price you are paying for an ETF? Here’s where the Net Asset Value (NAV) comes in.

Net asset value (NAV)

Like a mutual fund, an ETF also has an end of the day Net Asset Value (NAV). Just to refresh your memory, NAV tells you the total value of all the fund’s assets and yours. The formula for calculating NAV is NAV = (Value of all the assets – the expenses)/number of shares (units). But remember, an ETF trades real-time, whereas NAVs are only announced at the end of the day. So how do you figure out if the price you are paying for an ETF is fair in real-time? Enter iNAV

Intraday or indicative net asset value (iNAV)

Given that ETFs trade real-time, you need a reference point to see if the market price you see on your trading platform is a fair one and the indicative or intraday NAV (iNAV) serves as that reference. AMCs usually calculate this every 10-15 seconds and publish it on their websites. iNAV = last traded price of all the securities in the ETF basket X number of shares in the ETF creation basket + cash component (i.e. cash which is not deployed in the ETF) divided by total ETF shares in the creation basket. Put simply; this serves as a real-time NAV so that you can use this as a fair value reference to compare it with the current market price on the stock exchanges.

Creation unit

Like buying ETF units on the stock exchange, you can also buy units directly from the AMC. I’ll explain why you’d want to do that later. But, unlike the exchanges, you cannot buy 1 or 2 units directly from the AMC. You can only create and redeem units in what’s called the creation size that the AMC defines. A creation unit is nothing but a representative basket of all the securities in the same proportion as the underlying index. For example, the creation unit size of the ICICI Nifty 50 ETF is 50,000 units, and as of this writing, it’s about Rs 80 lakhs. Meaning, you need 80 lakhs to buy all the stocks in Nifty 50 in the same weight.

Market makers and authorized participants (APs) 

Unlike mutual funds, there’s another entity called market markers or authorized participants in the ETF ecosystem. The role of these guys is to provide liquidity on the stock exchanges. You don’t have to worry about liquidity in a mutual fund because there’s no real-time trading. But since an ETF trades real-time on the exchange, market makers are appointed by the AMC to provide liquidity continuously. They do this by providing continuous two-way quotes on the exchange, meaning they buy at the bid and sell at the offer, and the difference is the profit they make. Even though these are small amounts, since they keep doing this, it tends to add up.

Market makers typically tend to be large brokers in India.

Premiums and discounts

Since an ETF trades real-time on the exchanges, their price is influenced by demand and supply—the prices of liquid ETFs trade in line with the NAV of the ETF most of the time. But sometimes, particularly during volatile market phases, the price of an ETF can trade away from the NAV of the ETF. If the price of an ETF is above its NAV, it’s called a premium and if the price is below it’s NAV, it’s called a discount.

Tracking error

Tracking error is the annualized standard deviation of the difference between the ETF NAV returns and the index that it tracks. In simple terms, it shows you how closely an ETF tracks its underlying benchmark. A simple example would be if Nifty 50 returned 10% and Nifty ETF gave 9.8%, the tracking error would be 0.2%. An ETF or an index fund will have lower returns than the index because they have an expense ratio and an index doesn’t.

A lower tracking error indicates that an ETF or an index fund is tracking the index better. But this is not really an intuitive measure to understand and we’ll discuss that later.

With these concepts in mind, let’s get back to the concept of creation and redemption mechanism

There are a few reasons why the creation and redemption mechanism is important. For one, you need not always buy an ETF on the stock exchange. If you are buying in multiples of the creation unit size, buying it directly from the AMC is way better because you might face liquidity issues and impact costs when you buy large quantities on the exchange.

So, in the example I mentioned above, the ICICI Nifty 50 ETF’s creation size is roughly 80 lakhs. If you are investing in multiples of 80 lakhs, you can directly contact ICICI, and they will create units, in this case, 50,000 units and credit them to your demat. The AMC will create units at the iNAV.  Similarly, you can redeem them by transferring the ETF units to ICICI, and they will credit the cash to your bank account or you can also get the underlying shares instead of cash.

The second reason why creation and redemption mechanism important is for ETF arbitrage. Like I mentioned earlier, ETFs can trade at premiums and discounts to the NAV. Market makers are essential in the ETF ecosystem because they are responsible for correcting these premiums and discounts. They do this through the creation and redemption mechanism.

Typically ETFs trade close to their NAVs. Here’s a comparison of Nifty BeEs, SBI Nifty ETF, ICICI ETF and Nifty 50.

Nifty ETFs vs Nifty 50

But during a volatile market phase, for example, like the COVID crash in 2020, there can be wide premiums and discounts. Here’s how even a popular ETF like NiftyBeEs and SBI Nifty 50 ETF, India’s largest mutual fund performed during the volatile market phase of March-April 2020.

Nifybees vs Nifty 50

Now, here’s where the market makers come in. If there’s a premium, the authorized participant (AP) will buy all the underlying securities that make up the ETF creation unit. In this case, the AP will buy all the 50 Nifty stocks of the same weight; this is also called the creation basket and give them to the AMC. In turn, the AMC will create ETF shares and give them to the AP, who will then sell them on the exchange.

Similarly, if there’s a discount, the AP will buy the ETF units on the exchange and give them to the AMC. In return, the AMC will give the underlying shares of the ETF to the AP, who will, in turn, sell them in the market. The difference between the premium, discount, and the NAV will be the AP/market maker’s profit.

Perhaps, the best example of this would be the Motilal Oswal NASDAQ 100 (N100). During 2017-2018, the ETF was trading at a huge premium to the NAV. The premiums were as high as 20%+. This was probably because the market makers weren’t active in providing liquidity. Value Research allows you to compare the NAV and price, here’s a chart, notice the huge difference between the NAV and the price.

Someone could have taken advantage of this premium by going to Motilal AMC and asking them to create units, which happens at the NAV and sell them at the market price on the exchange. The difference would’ve been the profit.

N100 ETF price vs NAV

This premium persisted for a long time. Then Motilal, If I’m not wrong, appointed new market makers and launched a fund of fund (FOF) for the ETF, which corrected the premium. So the market maker around 2018 would have created Motilal units at the NAV and sold them on the exchange at the market price and corrected the premium.

N100 ETF price vs NAV

This is how creation and redemption mechanism in an ETF is used to ensure liquidity and arbitrage premiums and discounts.

29.7 – ETF liquidity

This is the most important thing when buying or selling an ETF because they trade real-time. When choosing an ETF, most people tend to look at the AUM of an ETF and the trading volumes to decide if an ETF is liquid. Although these 2 things should be considered, the size of an ETF or the daily trading volumes alone don’t indicate liquidity.

Let’s unpack what ETF liquidity really means. It’s essential to remember at this point that even though ETFs trade like stocks, they are not the same.

Layers of ETF liquidity -American Century

 

Secondary market liquidity: This is what you see on your trading platform. The spread between the bids and offers give you an idea of the available liquidity, but that’s not all. Take a look at this image, comparing Mirae Nifty 50 ETF and LIC Nifty 50 ETF. The LIC ETF has an AUM of Rs 618 crs, and the Mirae ETF has about 483 crs. As of writing this post, both the ETFs had just traded 500+ units.

Spreads

Typically, you’d ignore both ETFs assuming that they are too small and don’t trade much. But that would be an incorrect assumption because on-screen liquidity isn’t everything.

ETF market depth: If you look at the Mirae ETF, nearly 60,000 shares are available for purchase. That means, even if you place a market order, which is a really terrible mistake when buying an ETF, you will get a good fill at Rs 157.44. This is probably a market maker posting a bid and an offer. The LIC ETF, on the other hand, has no liquidity at all. If you’d have placed a market order for 100 unit by chance, your average price would have been way higher than the last traded price, given that there are no volumes and your order would’ve been continuously executed at higher and higher prices.

So, AUM and trading volumes don’t tell you everything. Market markers typically hold units that don’t show up in the market depth. If you place a limit order to buy, your order will be executed as the market makers place an order to sell. But yeah, not all ETFs have active market makers, this has to be part of your ETF due diligence which we’ll talk about in a bit.

Here’s how the Mirae ETF and LIC ETF have tracked Nifty 50. While Mirae has closely tracked Nifty 50, LIC has been all over the place trading at premiums and discounts.

Mirae vs LIC Nifty 50 ETF

Primary market: The third layer of ETF liquidity is the primary liquidity. Remember, a stock has a fixed number of shares on offer, But even though an ETF trades like a stock, it’s not a stock. Market makers and investors can create new ETF units. Large institutions, HNIs, typically don’t buy ETFs on the exchange. They directly reach out to the AMC and create units that don’t show up on your trading platforms’ market depth.

Liquidity of the underlying stocks: The last and the most important layer of ETF liquidity is how liquid the underlying stocks that make up an ETF are. Remember, an ETF is just a wrapper that holds all the stocks that make up the ETF or an index. So, an ETF can only be as liquid as the underlying stocks.

This might be a little confusing, so let’s take an example. Today, in India, we don’t yet have a small-cap ETF, have you ever wondered why? In the Indian markets, the liquidity quickly starts disappearing after the 200 largest stocks. As we go down the market cap, the smaller stocks tend to have less outstanding shares, less trading volumes, and usually keep hitting upper and lower circuits.

So, assuming there was a small-cap ETF and that there was a sudden spike in demand, the market maker would have had to create units to satisfy the demand. Now if some of the underlying stocks are not liquid or have hit circuits, which is quite common in small-caps, he wouldn’t have been able to create units. In such a case, the ETF will probably trade at a premium to the NAV because there will be more demand for the existing units. Not just, small-caps, even mid-cap stocks in India have liquidity issues. So, an ETF can only be as liquid as it’s underlying stocks. But this isn’t a problem in a large-cap ETF like a Nifty 50 ETF because these are the biggest and the most liquid stocks.

To summarize, trading volumes and AUM are factors, but they don’t tell you everything about an ETF.

29.8 – ETF choices in India

Like I mentioned at the start of the chapter, ETFs are pretty new in India, we have about 88 ETFs today. A majority of them are equity ETFs. Here are your ETF choices:

  1. Equity ETFs
    There broadly 2 sub-categories of equity ETFs. You have your plain vanilla market-cap-weighted ETFs that track indices like the Nifty 50, Nifty 100, Sensex etc. And then you have smart beta ETFs which target factors such as value, quality, low-volatility, momentum etc.
  2. Debt ETFs
    We have debt G-sec ETFs, Bharat bond ETF which just holds bonds issued by PSUs, and then you have an ETF like the CPSE+SDL ETF by Nippon which holds PSU bonds and State development loans (SDLs).
  3. Commodity ETFs
    For now, we just have gold ETFs.

Here’s a list of all Indian ETFs.

Are all ETFs passive?

This is a common question that keeps coming up. Today, the biggest ETFs we have are passive ETFs that track either the Nifty 50 or Sensex 30. But smart beta ETFs aren’t passive, even though the ETFs track an index. They are more of a hybrid of active & passive like we discussed in the smart beta chapter. Globally, 80-90% of all ETFs are passive, but we see the first traditional active ETFs in the US. Maybe, we’ll eventually see them in India as well. So ETFs need not be all passive, it’s just that they are passive today.

ETF due diligence

I know this has been a little long, but the idea was to give you the full context you need before investing in an ETF and help you avoid rude surprises. And I hope at this point; you have a clear understanding of how an ETF works and its mechanics. With that in mind, let’s now look at some things you should consider before you buy an ETF.

Always use limit orders

I cannot stress this enough but never use market orders when buying an ETF, always use limit orders. This is one mistake I see investors constantly make. We saw this earlier but let me reiterate this with an example. Take a look at the market depth of Aditya Birla Sun Life Nifty Next 50 ETF. If you placed a market order for 200 units, your order would be executed at prices starting from Rs 350, which is above the LTP, to begin with, and finally, at Rs 374, that’s 8.7% higher than the LTP.  So, always use limit orders.

Market depth of Aditya Birla Nifty Next 50 ETF

Always check the iNAV

Always look at the iNAV on the AMC website and place a limit order at that level. Don’t just place a limit order without looking at the iNAV. The other issue is that sometimes AMC websites don’t update their iNAVs or their websites might be down. If there is a big difference between the last updated iNAV and the current market price, that’s a sign that there is something wrong. So, make sure to compare the ETF with the intraday chart of the underlying index of the ETF on Kite, and that will give you an indication if the price is correct. Check with the AMC in such a case before placing an order.

Compare the NAV and the price of an ETF and see how it has performed

You should always buy an ETF that tracks the underlying index as closely as possible. Here’s how Nippon NiftyBeEs ETF has tracked it’s NAV, it’s pretty close. You can compare the price and the NAV on Value Research; we’ll try having this feature on Coin.

Niftybees NAV vs price

Picking up on the earlier point about the tracking error, AMCs disclose the tracking error on their factsheets. But if you see a tracking error as 0.02%, it’s hard to understand what it means. Moreover, AMCs calculate the tracking error on the NAV, but you buy and sell based on the price, which can be totally different. So the best way to analyse an ETF is to look at the difference between ETF prices and the underlying index. You want the price of ETF to track the index consistently without huge differences.

Note: Always compare the ETF price with the total returns index (TRI) and not the price returns the index (PRI). The TRI includes dividends. All the index data you see on Kite is PRI. Since ETFs track TRI indices, they re-invest the dividends which reflects in the NAV of the ETF. 

Look at the average volumes

Look at the average volumes over a period of time and see how an ETF has traded. You should invest in an ETF that trades regularly. You should avoid ETFs that just have a brief spike in volumes and then don’t trade. The Edelweiss ETF – Nifty 100 Quality 30 is an example. The monthly average volumes are about 150 units. You can check the average volumes by applying a moving average on the volume chart on Kite. So assuming you had bought this ETF and had to exit, you most likely wouldn’t have been able to.

Edelweiss ETF – Nifty 100 Quality 30

Avoid buying and selling at market open

Most ETFs don’t trade much for 30 mins to 1 hour of the market open. They also tend to trade at abnormal prices because of the low volumes, even orders for a few units can move prices. If you can, avoid trading in the open. And if you have to, check and verify the iNAV and use limit orders.

Is the AMC focussed on ETFs?

Today, most of the AMCs offer ETFs but doesn’t mean they are serious about them. Most of the ETF volumes are in ETFs offered by Nippon, ICICI, and SBI largely. Other AMCs like Mirae, Edelweiss with their debt ETFs do seem serious about building out their ETF offerings. So, along with the other things on the due diligence list, you’ll also have to look at whether an AMC is serious about the ETFs it offers. For example, if you look at some of the ETFs by Aditya Birla Mutual Fund, IDBI, LIC, Indiabulls etc., they have horrible tracking errors and almost no volumes.

Creating units with the AMC for higher-value investments

If your investments in ETFs are equal to or more than the creation basket value, it’s better if you approach the AMC to create units rather then buying on the stock exchange.

29.9 – ETF vs index funds

This is another question that keeps coming up. Hopefully, this table should help answer these questions. In short, if you want to have active control or if you are actively using passive ETFs, then ETFs are a better choice. But if you are lazy like me and want to make as fewer choices as possible, then index funds are a better choice.

With ETFs, you can express tactical strategies better than index funds because you can’t buy and sell index funds immediately.

Index funds

Exchange-traded funds

End of the day NAV Real-time pricing. Can be bought and sold anytime
No issue of spreads because execution happens at the end of the day You might see wide spreads in certain ETFs and during market volatility.
Liquidity isn’t an issue and can be managed. Certain ETFs don’t trade much, and underlying liquidity of stocks can impact APs and market-making
Can create SIPs Possible with Zerodha, may not be possible with other brokers
Expense ratio is all-inclusive—no additional charges You have to pay a brokerage (free at Zerodha) & other charges & taxes separately
Not possible to have tactical strategies. Less flexible compared to ETFs With ETFs since you can buy & sell anytime, you can express tactical views. ETFs are much more flexible
Index funds tend to hold more cash and hence have a slightly higher tracking error ETFs don’t hold much cash and hence have a lower tracking error
Lesser choice at-least as of now. But AMCs are launching a fund of funds for ETFs Pretty much all of the smart-beta products are ETFs. You have a wider choice

29.10 – Performance of ETFs vs actively managed funds

We discussed this earlier in the index funds chapter as well. In the last decade or so, index funds and ETFs have become increasingly popular around the world. One reason is that investors have increasingly realized that a vast majority of actively managed mutual funds don’t beat their benchmarks. In a developed market like the US,  ~90% of active funds don’t beat their benchmarks.

The Indian markets have grown a fair bit and have become increasingly professionalized; institutional investors are a big part of today’s market. This means that most of the informational edges and asymmetries have been arbitraged away. Today, pretty much everyone has access to the same information. The odds of someone finding some piece of information that can move a stock, at least in the large-cap space, for example, is pretty much zero. But perhaps the biggest reason why active funds underperform is that they charge too much.

Actively managed large-cap funds on an average charge~1.5% whereas a Nifty 50 index fund is available for 0.10%. And we see this in the performance. S&P publishes a report called SPIVA, which measures the performance of active funds. For any period, over 70% of all large-cap funds fail to beat their benchmarks.

SPIVA India

Traditionally, the view was that the mid-cap and small-cap space was inefficient, and this was where stock pickers thrived. While this was true, it seems like this is increasingly becoming less so. In the last 5 years since the SEBI categorization exercise, active mid-cap funds have had a tough time keeping up with a broad mid-cap benchmark like the Nifty 50 or BSE/NSE Mid-cap 150 index and even Nifty Next 50 etc. Here’s a quick look, this is just for illustration, and ideally, you should look at the rolling returns.

 

Fund Name

3 Yr Ret (%) 5 Yr Ret (%) 10 Yr Ret (%)
Kotak Emerging Equity Fund Regular Plan 12.09 19.16 17.89
DSP Midcap Fund – Regular Plan 10.97 18.49 16.63
Invesco India Mid Cap Fund 13.24 18.07 17.95
Edelweiss Mid Cap Fund – Regular Plan 9.85 17.92 18.28
Nippon India Growth Fund 10.68 17.65 13.27
BSE Midcap 150 Index 9.07 17.6 12.94
Taurus Discovery (Midcap) Fund – Regular Plan 9.44 17.59 15.3
Tata Midcap Growth Fund – Regular Plan 11.2 16.91 16.93
HDFC Mid-Cap Opportunities Fund 8.03 16.44 17.41
L&T Midcap Fund 5.39 16.33 16.15
Franklin India Prima Fund 8.86 15.79 17.27
ICICI Prudential Midcap Fund 6.98 15.28 15.07
UTI Mid Cap Fund – Regular Plan 8.68 15.27 17.2
BNP Paribas Midcap Fund 8.44 14.94 17.59
Baroda Midcap Fund 8.52 14.51 3.73
Motilal Oswal Midcap 100 Exchange Traded Fund 5.8 14.36 12.11
SBI Magnum Midcap Fund 9.36 13.97 17.37
Sundaram Mid Cap Fund – Regular Plan 3.56 13.25 14.98
Quant Mid Cap Fund 12.15 13.01 11.29
Aditya Birla Sun Life Mid Cap Fund 2.77 12.28 12.94

The bottom line is that most actively managed funds don’t outperform a simple broad-market ETFs or index funds like Nifty 50, Nifty Next 50 and Nifty Midcap 150. This is due to a combination of high costs, increasing market efficiency, and internal fund mandates to not deviate too much from the indices. Moreover, it’s tough to pick those funds & managers that beat their benchmarks. And even if you figure out how to pick a winning manager, there is very little persistence in performance. The best performing fund often ends up being the worst-performing fund over a period of time.

Today, it’s a no-brainer to look at index funds in the large-cap space. There’s increasing evidence that it’s the same in the mid-cap space as well. As for small-caps, these are severely risky and buy and hold may not be an optimal strategy, and active management both in a fund and in timing is needed.

Key takeaways from this chapter

  • ETFs trade real-time on the stock exchanges and you can now set-up SIPs in ETFs to invest every month
  • Blindly choosing an ETF is a bad idea. ETF due diligence before investing is extremely important
  • ETF liquidity is an issue in India because our markets are still small and this needs to be kept in mind when buying and selling
  • Always use limit orders and compare the market price of the ETF with the intraday or indicative NAV (iNAV) before buying and selling
  • You can check the iNAV on the respective AMC’s website
  • Sometimes the iNAVs on AMC sites may be wrong. If the difference between iNAV and the price is huge, it’s a red flag.
  • Compare the ETF price with the underlying index or check with the AMC in cases where the ETF prices are way off from the iNAVs/NAVs
  • Large-cap and mid-cap Index ETFs make a lot of sense vs actively managed large-cap and mid-cap index funds

172 comments

  1. Harsh Sahu says:

    Is there any process to find good ETF & starting investment

  2. Alpesh says:

    While investing in ETF , How dividend is treated in Nifty 50 , whether dividend is distributed to retailers or AMC kept with them.

    Where can v track such things ?

    Thanks

    • Kulsum Khan says:

      Ah, added a note Alpesh. Since all ETFs have to track the total returns indices, all dividends in an ETF are reinvested and this adds to the NAV of the ETF.

  3. Sundeep says:

    Sir this chapter is easily the most comprehensive material on ETFs available in Indian context. It cleared up lots of doubts I had. Thanks a lot sir.
    What is the next chapter going to be on sir?

  4. Shubham says:

    What happens with the dividend and how to check the impact of dividend on pricing?? Any comments..

    • Kulsum Khan says:

      Shubham, Since all ETFs have to track the total returns indices, all dividends in an ETF are reinvested and this adds to the NAV of the ETF.

  5. Keshav says:

    Which are the ETF I can pledge in zerodha? And what’s the percentage of hair cut?

  6. Rajesh Gadge says:

    How realtime NAV,s of the ETF are calculated? Is it based on the prices of the stocks which contains in the ETF portfolio, or just like a stock suply and demad basis.?

  7. Rohith says:

    Hi Karthik,
    Thanks for explaining every fund in detail and sharing your expertise cum experience.
    Wanted to know if there be would be a chapter on REITs as well.

  8. Nandhakumar says:

    Excellent write up. I have always wondered why there no ETFs in mid and small cap space. Found the answer here. Thank u so much.

  9. Keshav says:

    Why my query is not answered?

  10. Anil Kumar says:

    Is GOLDBEES are good for long term investment?

  11. MADHURA says:

    How dividends, bonus, stocksplits and rights issue impact the ETF price

  12. Keshav says:

    Is Collateral from Bharat bond ETF considered as cash component in zerodha?

  13. Augustine Charly says:

    Have a ‘NEXT’ button after each chapter.

  14. Augustine Charly says:

    I’d like to share my personal way of checking how well an ETF is tracking it’s index. Try entering the following 2 examples tradingview:

    =NSE:NIFTYBEES/NSE:NIFTY

    =NSE:BANKBEES/NSE:BANKNIFTY

    This plots how well an ETF is tracking it’s index. An ideal ETF in this regard would give a flat line.

    Let me know your thoughts on this approach. 🙂

  15. Augustine Charly says:

    The tracking issue mentioned in this chapter can be seen by entering this in tradingview

    =N100/(NDX*USDINR)

  16. Saurabh Agrawal says:

    Hi,
    I wanted to understand what is the general investment horizon one should look at while investing in ETF’s.

    Reading all of your Personal finance module gave me a very deep understanding of how to select MFs. I have created my portfolio of debt and equity funds but now unable to understand if ETFs should be a part of it, if yes, what advantages I have while investing in ETFs over regular equity index funds?

    • Karthik Rangappa says:

      Saurabh, regardless of which equity-oriented instrument – ETFs or funds, you need to have a long term horizon. So I’d suggest you look at something like 5,8, or even 10+ years of investment horizons when evaluating ETFs.

  17. john says:

    Sir, the download as PDF option on the most of the new chapters is unavailable.
    Could you check on that?
    Thank you

  18. Vaibhav Thakkar says:

    Hi,
    I had invested in SBI Nifty 50 ETF and have just received information that dividend is declared and it says “the NAV of the scheme would fall to the extant of payout and statuary levy”. Doesn’t it contradicts the above statement of kulsum in which she said that dividend would be reinvested and NAV would be added ?

  19. Vaibhav says:

    I received dividend amout in my bank ac today.

  20. Rajasri says:

    How do you I mean at what price you execute my SIP for ETFs. Do you directly create units with AMC

  21. nidhish says:

    Hi

    I have been investing in Motilal Oswal Nasdaq 100 Fund of Fund since few years.

    Will it be wise to switch for Motilal Oswal Nasdaq 100 ETF, since there is some expense ratio(although quite low for direct plan .1%) and I am looking this as a 10 year investment.
    Also, as you mentioned the price of this ETF trade at premium, does Motilal Oswal purchase this ETF at base price since it might be trading this in large quantities. Do let know your views…….

    • Karthik Rangappa says:

      I’d suggest you stick to FOF, way easier and you don’t have to worry about anything else.

  22. Linga says:

    In performance comparision table,BSE Midcap 150 TRI Index can give a better picture than simple BSE Midcap 150 Price Index.

  23. CHHAGAN MARATHE says:

    सर आपने बहुत अच्छी जानकारी दी है। ईटीएफ मार्केट ऑर्डर में बाय करने की गलती इससे पहले मैंने की है। लेकिन ऐसी गलती आगे मैं कभी नहीं करूंगा। जब भी मुझे ईटीएफ खरीदना होगा तब मैं सबसे पहले ईटीएफ की रियल टाइम nav की जांच कर लूंगा और उसके बाद ही लिमिट ऑर्डर लगाकर परचेज करूंगा,धन्यवाद।

  24. Md. Sivlee Rahman says:

    Is the pdf for personal finance part -1 module available?

  25. Devendra says:

    I am having some units of SBI Nifty50 ETF for which dividend was credited to my bank account recently. This somewhere contradicts with the claim that AMCs reinvest dividends. How to find whether AMC reinvests the dividends or not? Also, what are the implications from taxation point of view in both the cases of dividend credit and reinvestment? Could you please clear the doubt.

    • Kulsum Khan says:

      Hey Devendra, it’s weird because the TRI index includes dividends which means an ETF has to reinvest the dividends. But according to reports, SBI issued these dividends to help EPFO

  26. LAXMAN VEKARIA says:

    A perfect must read before ETF investing. Thanks a lot.

  27. Abhishek says:

    “Large-cap and mid-cap Index ETFs make a lot of sense vs actively managed large-cap and mid-cap index funds”. Karthik Can you explain this?

  28. Naresh says:

    Is it ok to buy when price of ETF is 1 or 2 rupees higher than current iNAV? I checked always current price is always 1 or 2 rupees higher than iNAV.

  29. Raghav says:

    I have 2 questions:

    1) Suppose the LTP of ETF/Equity is 300 and the offer price is 305. And if at that time I place buy request in open market without keeping any limit price then will my order execute at 300 or 304?

    2) Can I keep ETFs for more than one day after I purchase it?

  30. Anil says:

    Almost all the ETFs can be pledged. You can check the list of securities and the haircut here : https://docs.google.com/spreadsheets/d/1vRI4NKpJ-3mnOWxUhSRMSQD5txy8QNumzSQrdfGKyL0/edit?usp=drivesdk

  31. Aniket Vishwakarma says:

    Best material on ETFs for Indian context. One doubt sir, in the market maker section, it is said that market makers buy at bid and sell at ask. How it’s done.

  32. Vandhiadevan Varadharajan says:

    “Always use limit orders and compare the market price of the ETF with the intraday or indicative NAV (iNAV) before buying and selling ”

    I am using smallcase All weather investing for my long term goals, this smallcase always BUY/SELL by Market order only and it has 4 ETFS in the basket. Since i do not have control on Market orders, Is it advisable to stay invested with this smallcase.

    • Karthik Rangappa says:

      I think smallcase has mostly liquid ETFs, should be ok. Maybe you can check how much you lose by slippage.

  33. Vandhiadevan Varadharajan says:

    Thanks, How do i check the slippage .Can you explain a bit.

    • Karthik Rangappa says:

      Basically the amount of money you’d lose if you were to buy and sell the ETF at market. The higher the amount you lose, the higher is the slippage.

  34. Investor says:

    Excellent flow of content. Very useful

  35. Sarthak Gupta says:

    Hey, looking at a horizon of 15+ years.
    I guess index is the way to go.
    Should I be looking at index funds or etf? Considering ETFs have a lower expense ratio.
    Also what allocation would you suggest for nifty50, next50 and midcap?

  36. Vidit says:

    We can check Total Returns Index to see the dividend adjusted value of an Index. How can I do the same thing for a single stock? Like I want to track the past 10 years performance of TCS keeping in consideration its dividends are re-invested, then how can I do so? Is there any website where we can see this chart?

    • Karthik Rangappa says:

      Unfortunately, that’s not available Vidit or at least I’m not sure about where this is available.

  37. Trinadh says:

    Why is there difference in closing price and opening price in ETF’s. Same like stocks. do ETFs has pre market session?. If yes, what are its timings?

  38. Koushik says:

    As you have mentioned creation of SIP for ETF is Possible with Zerodha, please let me know how to set this up in Kite / Coin?

  39. vishy says:

    Hi,

    If I do pick up an FOF which invests in ETF, will the liquidity risk goes away? and will I be charged a dual TER (one from the MF and the other from the ETF)?

  40. Rahul says:

    Hi Kulsum,
    Is there a way I can track ETF to TRI? and is it available on Tradingview? And how will retail investors benefit when the index data you see on Kite is PRI and based on which we invest? And if TRI keeps going up and up due to Dividend reinvestment how and when do we see the increase in our NAV or how do we benefit? or TRI is notional?

    I also want to know where can I get the tracking error data?

    Apologies for so many question marks. I hope you will answer to all my questions one by one. Thanks!

    • Karthik Rangappa says:

      TRI is not notional, its just that the exchange does not stream it, which means no broker can. You can download the historical and daily data though from the exchange site. Tracking error data is published by websites like Morningstar and value research. I guess the AMC too publishes this.

  41. Rahul Mamtora says:

    Hi Karthik,

    Thanks for your reply. You have provided me info on TRI and Tracking error, and I have got it. Sorry, but you haven’t answered my larger question though. That is how do I benefit from the dividends ‘actually’ received by these ETFs? Let’s assume, I purchased 1 unit at Rs.50 per PRI and at that moment TRI was also Rs.50. Then 1 year later, PRI has increased by 10% to Rs.55 which follows/tracks the underlying benchmark Index, which has also increased by 10% at that time; whereas TRI would have grown by 20% to Rs.60 due to Dividend received/reinvestment. So how do we retail investors get the share of that Rs.5 seen in TRI. Request you to either explain in detail or please share a reference website or document that clearly explains this subject. Appreciate your patience, since this is really important for me.

    Thanks
    Rahul V M

    • Karthik Rangappa says:

      Rahul, Since all ETFs have to track the total returns indices, all dividends in an ETF are reinvested and this adds to the NAV of the ETF.

  42. Rahul Mamtora says:

    Sorry, but I really don’t get the part where you have mentioned, all dividends in an ETF are reinvested and this adds to the NAV of the ETF. My question is NAV of TRI or PRI? Coz per PRI NAV is what we buy from secondary market. I apologize for being so derailed oriented. Coz every now n then i see multiple companies announcing their Dividend payout, but still the PRI NAV doesn’t go up even a paisa. I really want to talk to someone who is well versed in this area. Please help.

    • Karthik Rangappa says:

      Rahul,

      1) When the portfolio companies of ETF pay dividends, the dividends are received by the AMC (ETF company)
      2) Dividends received goes back to the funds
      3) NAV tracks TRI
      4) Dividend payout or PRI increasing is not related.

  43. Madhav says:

    BTST IS POSSIBLE IN BANKBEES OR NIFTYBEES PLZ REPLY

  44. Sachin says:

    Great article. A question on charges – If ETFs are traded like stocks on exchange, does it mean DP charges are applicable on selling ETFs ? It is 15.3 /- currently for selling stocks.

  45. Sachin says:

    *15.93 /-

  46. Prateek says:

    Any guiding material on creating scanners and also creating strategies for trading liquid ETFs at NSE using Zerodha streak etc which can give insights similar to stock trading.

  47. Vineet Kumar Agarwal says:

    Sir,
    I have read the personal finance chapter. my question is if I want to invest money like there are many schemes like those
    which have been explained in the personal finance chapter like MF, Bonds, Debt, ETF, SIP, Index, and Arbitrage funds. etc.
    can I have a in a nutshell like a pdf or a image which specifies and explains which is better according to the different personal requirements like low risk, high risk, long term, short term etc. Instead of me looking and considering into all scenarios just for a common layman. you have posted one image in this chapter but that specifies only equity and debt. Thanks I would be pleased if you could help

  48. Vivek Sharma says:

    Hi Karthik,
    By far it’s one of the complete and well organized article on ETFs. Kudos for your effort.

    1. As you mentioned that to create liquidity, Market makers buy at the bid (buy price) and sell at the offer (sell price).Since Bid price Conventionally is lower than offer price, the difference is the profit they make.
    In this process, from whom they buy and to whom they sell ? If they buy from AMC, it will be done at NAV price, sellers in secondary market won’t sell below Offer price and buyers in secondary market won’t but above bid price…. Hence the question.

    2. Limit order during buy…. Does this means that Limit order should always be placed at current prevailing or below iNAV?.

    3. I feel investing for 7+ years in combination of Large cap, Mid cap and foreign index ETFs in certain proportion should be good. Owing to liquidity, should we keep Mid cap and N100 ETF out of portfolio?

    4. Is it possible in zerodha to place SIP order of already created ETFs basket such that the order would get triggered only when the market price is equal or near to iNAV (limit price).

  49. Hitesh Roy says:

    Easily one of the best articles explaining ETFs in India. Kudos Zerodha and Varsity team. Thank you for clearing so many doubts.

  50. Vivek Sharma says:

    Hi Karthik, Thanks for reply.
    This article gives a strong sense and feeling that long term investment in ETF is ideal for wealth generation.
    Going by that I have created a basket in kite app with Niftybees, JuniorBees, NETFMID150 & MN100 with 30,40,15,15 split respectively.

    As recommended, I went on to execute the basket with limit order ( limit price been close to iNAV).By the time it got placed, price moved up slightly and non of the order got executed. So I went on to manually modify each order with best possible price as per market depth for getting units

    1. Now since I want to start SIP of the basket every month, how can we still place limit order so that SIPs are executed and the price we get is also best at that timetime or close to iNAV?
    2. Any indicators Which can be used to asses the market next day so that we can place limit order one day before SIP execution.
    3. Can we see iNAV along side other prices in zerodha kite app.

    • Karthik Rangappa says:

      1) Unfortunately Equity SIPs are market orders, cant really have a limit since it is not possible. Its best you place this manually, meanwhile I’ll check what else can be done for this
      2) Not that I know about 🙂
      3) Not possible since this is not available at the exchange.

  51. Amey Devlekar says:

    Can we trade ETF’s intraday like we trade equity/futures/options intraday ?

  52. Rushiraj Bhusare says:

    How is a new ETF introduced into the market, Does it also have something like an IPO?
    Also if I buy a mutual fund unit from an AMC will I be able to sell it on the market as an ETF?

    • Karthik Rangappa says:

      Yes, usually it comes in via a new etf offer, just like an IPO. If you buy MF online, then you can sell it online

  53. Sunil Kumar says:

    Can ETF’s be bought and sold same day (CNC) ?

  54. Bharath says:

    What happens to corporate actions like share splits, bonus shares ?

  55. Jitendra N says:

    Hello Team, it would be nice to have this module made available on the Varsity mobile app!

  56. Siddhesh Khaitan says:

    Hi @Karthik, thanks for this detailed chapter.

    What are your thoughts on the pros and cons of the Mirae Asset Financial Services ETF NFO that closes on 29th July’21 ?

    Best Regards,

    Siddhesh

  57. bandesh says:

    How do we get to know the lot size?

  58. pairav says:

    i wanted to know as i am a beginner at what price should we place the limit order.How much difference should be between the inav and the price for which we put the limit order?

  59. Ratan Singh says:

    Is investing in an NFO for ETF a good choice

  60. Amit Patnaik says:

    Thanks for the fantastic learning, as usual, Karthik, Bhuvan and Team Zerodha and Varsity!

    I have two questions and a suggestion.

    Question – Would a passive fund tracking an index like get rebalanced when the index itself undergoes changes? Are actively managed funds/Mutual Funds superior to passive Funds from a taxation on rebalancing perspective?

    Suggestion – Can commenters get an email notification when their comments are replied to? It becomes quite challenging to locate one’s comments after it moves down the ‘latest’ list on the homepage.

    • Karthik Rangappa says:

      Thanks, glad you liked the content.

      1) Yes, it does. Taxation wise, they are all the same. Fee wise, passive fund is cheaper.
      2) Not possible, there are so many comments that flow in that it gets spammy at some point 🙂

  61. Amit Patnaik says:

    I see your point about the volume of comments. Do you think it would be viable to move Varsity’s comment section to TradingQna for discussions? Or link Zerodha accounts with Varsity so that a user can track their own comments and replies, apart from learning journey?

    • Karthik Rangappa says:

      We have evaluated that as well, there were few technical challenges with it. Let me revisit this with the team again. Thanks.

  62. Mayank says:

    How do i identify Expense ratio of any ( all) etf, mutual fund has better coverage online and by other websites but seems all AMC are not transparent on their Expense ratio they charge for their ETF

  63. Ayush Sharma says:

    Hi, I don’t have clarity about the Expense Ratio of ETFs. At what step in the process do the AMCs take their cut?

  64. Gaurav Saha says:

    Can we say that Index ETFS for example Nifty ETF is a kind of future contract of nifty,except the expiration and price… Because nifty ETF will track the movements of nifty as it is comprising of stock in the same proportion and it will be traded just like future contracts which will decided the NAV.

  65. Vikas says:

    Pls help me with script name for Axis heath care etf

  66. Nachiket Jadhav says:

    Hi. Very nice and informative article. Can you please elaborate on whether the expemse ratio of an ETF works exactly like that of the index fund or other mutual funds? ie as yearly percentage of AUM

  67. Ram Aadepu says:

    When the ETF units will be reflected in demat if subscribed through NFO? I have applied for kotak nifty alpha ETF and still could not see then in my demat

  68. Yogeshwar says:

    Do the expense charges, we have to pay for intraday trade also ?
    If yes, how much it will be ?

  69. Narayan says:

    ETFs vs Index Funds – which one is better for investors in terms of cost (fees) in the long run, if redemption/ selling is done, say, 4-5 times over a period of 10 years? Since brokerage is 0 in zarodha, are ETFs more cost effective even if we consider DP charges, taxes, etc?

  70. Karthik says:

    Sir, thank you for this module! 1 doubt. In the summary’s last point – “Large-cap and mid-cap Index ETFs make a lot of sense vs actively managed large-cap and mid-cap index funds”…. How can there be ‘actively managed’ large cap and mid cap index funds? Index funds are passive by nature right?

  71. Vikram Chaudhary says:

    A great article on ETFs. Solved all my queries.

  72. Trader says:

    I want to invest 10000 per month in index. But I am not sure whether to go for index MF (ex. having 0.2% as expense ratio ) or Index ETF ( ex. Having 0.06% as expense ratio ). Because, even if expense ratio is less in ETF, it will cost me additional charges delivery,etc charges n taxes every month.

    • Karthik Rangappa says:

      The only problem with ETF (as of now) is the slippages. Hopefully, this will improve over time. For this reason, I personally do index funds.

  73. jeet says:

    if i want to buy small cap etf of axis how to search? zerodha doesnt show it

  74. Pratap says:

    I have noticed that usually when market opens, the ETFs open at a higher price and then just keep dropping..all this happens in just couple of seconds.. however everything happens so quickly that orders do not get execute. Do we know why this happens?

    • Karthik Rangappa says:

      Not sure, but I guess its about investors trying to exit at higher prices at the start of the day matching with a market order and then the market course-correcting or something like that.

  75. Deb says:

    Are all ETFs available in zerodha kite? Asking bcoz I couldn’t find any result by searching ICICI PRU ALPHA LOW VOL 30 ETF in my kite watchlist. If one has to consider this etf how can one do? Also any comments how to decide whether the benchmark NIFTY ALPHA LOW VOL 30 ETF is better or the ICICI PRU one? Thanks.

    • Karthik Rangappa says:

      Deb, ICICI Pru Alpha symbol is – ICICIALPLV.

      I think the easiest check is to compare the stocks and the respective weightage 🙂

  76. Viral mehta says:

    Which ETF should be bought looking at the current situation and how to check the i nav of the ETF ?

  77. Parash kumar says:

    Kya ETF me BTST kar sakte hai ?

  78. Pitabasa says:

    If I start SIP for 10k in ETFs for eg- 30 years, would there be enough liquidity while disposing the SIP

  79. Kiran says:

    I have applied for motilal oswal s&p 500 low volatility mutual fund in etf. 4 units are credited. Does again next month 4 units or xxxxx units are credited again? Like a sip?

  80. Bappa says:

    In this Chapter, we learnt that SIP is possible in ETF but author also suggested to use Limit order always. Even if we can use Limit Order in SIP technically, How is it possible practically for anyone to guess the price for next one year for a monthly SIP?

    Since in ETF, we cannot make fixed amount SIP just line mutual fund, we need to mention fixed unit
    Since in ETF, it is always advisable to use limit order , we must use fixed price

    So, these two conditions above making the SIP route for ETF impractical. Is it correct understanding ? or Am I missing something ?

    • Karthik Rangappa says:

      There is no guessing required. Every time you buy (monthly), place a limit order. But yeah, I get your point. Let me check with the team.

  81. Bappa says:

    Thank you Karthik for your quick reply. Indeed , pls check with team and let all of us know about this SIP route for ETF.

    I think at present only realistic option as below for a monthly SIP
    1. Each month on the preferred date , login to kite manually,
    2. Go to the respective amc web site to check iNAV
    3. Place a limit order with iNAV value in kite
    4. Wait for some time to see if order is getting executed or not.
    5. If not , because market price changed , go back to amc web site again to see the iNAV again and modify the limit order in kite with new INAV

    Indeed , it is too hectic for the people prefer SIP route for automatic investment .. it is even more hectic than buying normal share.

  82. Shiv says:

    this is the best, most comprehensive, most detailed, most insightful tutorial I have read on ETFs. eg. author has taken extra effort to highlight the importance of using “limit price” instead of “market price”, summarized comparisons of performance across classes, distilled essence. excellent job by the author, much thanks for the help and hand-holding for a newbie like myself.

  83. Sarthak says:

    Can you provide some concrete reasons on why should we use limit orders specifically for buying/selling ETFs? Most of reasons that I have read just point out normal differences between limit and market orders and do not help in anything regarding ETF orders.

    • Karthik Rangappa says:

      Its just that with limit order you will know the specific price at which you are buying the ETFs. So yeah, it is for the normal reasons why you place limit order to buy ETFs.

  84. Kunal says:

    In the comparison chart that you have shown for NiftyBeEs ETF and how it has tracked it’s NAV, I am confused about the NAV. For ex, the NAV is 1886.97 in the chart you have given, while the price is 163.93 as of 15/2/21. Where is this NAV value picked up from? I checked the Nippon AMC website to look up the NAV, but doesn’t like that’s the place from where the NAV is taken.

  85. Kunal says:

    Just to clarify. I downloaded the historical NAVs for Niftybees ETF from Nippon AMC and the NAV for 15/2/21 is 163.6023. This is indeed much closer to the price 163.93 for that day. Just wondering if you would know where did the value 1886.97 as reported by Value Research come from. It kind of threw me off for a while, but given that the graphs for NAV and price are closely tracking each other, I wonder if this could be a glitch in the Value Research chart. Will appreciate your thoughts on the same.

    Btw, you truly have done an amazing job at explaining stock and MF concepts here. For a complete newbie like me, this is the resource that I have kept coming back to again and again.

    • Karthik Rangappa says:

      Its not really a glitch. Maybe you are expecting the NAV and price to be very similar, but that’s not always the case. As long as the ETF price tracks the NAV closely, its fine.

  86. Akshay Kumar says:

    After reading this article, it seems little hectic to invest in ETFs so simply I Just want to know that if I want to invest in nifty 50, nifty next 50 , midcap 150 index and corporate & PSU banks debt for over 15-20 years period. What should I go for either sip in index fund or in passive etfs to minimise cost and taxes after redemption. Please suggest me.

  87. Anuj says:

    What would be the fees of buying and selling, like do amc charge entry load, exit load, expenses, etc??
    Please share with example..

  88. BHARAT GUPTA says:

    How niftybees etf opening prices were dicided when there is NO AMO ORDER ALLOWED AND NO PRE OPENING ORDERS ACCEPTED?….🔥🔥🔥

    • Karthik Rangappa says:

      There’s no pre-open session for ETFs. The open price is calculated similarly to F&O. The price of the first trade will be the open price.

  89. Lakshya Khanna says:

    Great experience learning with varsity
    Great job!!
    well donee

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