Category Archives: ETF

Investing 10 lakhs for one year can be a challenging task that requires careful consideration of various factors, such as risk appetite, investment goals, and expected returns. It's crucial to make informed investment decisions that align with your financial objectives and tolerance for risk. In this comprehensive article, we will delve deep into the world of investment options available in India and explore the best ways to invest 10 lakhs for a one-year period. By understanding the pros and cons of each option, you can make well-informed decisions that optimize your investment potential while mitigating risks. https://www.youtube.com/watch?v=l8Hyb77tkM8 INR 10 Lakhs Investment Plan | 1-Year Guide 1. Fixed Deposits (FDs) Fixed deposits are a reliable and widely popular investment option due to their safety and stability. With FDs, you can deposit a lump sum amount for a fixed tenure and earn a predetermined interest rate. The interest rates offered by banks typically range from 4% to 6%, providing a predictable return on your investment. FDs are an ideal choice for conservative investors who prioritize capital preservation and a guaranteed return on their investment. Furthermore, they offer the convenience of easy liquidity, allowing you to access your funds when needed. How to Invest INR 500 for Child Education every month? Read More 2. Recurring Deposits (RDs) Similar to fixed deposits, recurring deposits allow you to invest a fixed amount every month for a predetermined period. RDs offer similar interest rates as FDs, making them suitable for individuals who want to build a habit of regular savings. This investment option is particularly appealing to those with a steady income who prefer a disciplined approach to investment. By contributing a fixed amount regularly, you can accumulate a sizeable corpus over time while enjoying the benefits of compounded returns. 3. Public Provident Fund (PPF) The Public Provident Fund (PPF) is a long-term investment option that not only offers attractive interest rates but also provides tax benefits under Section 80C of the Income Tax Act. Currently offering an interest rate of 7.1%, the PPF comes with a lock-in period of 15 years. It is an excellent choice for investors seeking a safe and secure investment avenue that can also help in building a retirement corpus. The PPF provides the advantages of compounding and tax-free returns, making it an appealing option for long-term wealth creation. https://www.youtube.com/watch?v=tdwqQH0xkFw 4. Equity-Linked Savings Scheme (ELSS) The Equity-Linked Savings Scheme (ELSS) is a tax-saving mutual fund that primarily invests in equities. ELSS offers investors the dual benefit of potential capital appreciation and tax deductions under Section 80C. However, it is important to note that ELSS comes with a lock-in period of three years, making it suitable for individuals with a higher risk appetite and a long-term investment horizon. ELSS investments expose you to the volatility of equity markets, but historically, they have delivered attractive returns over the long run. Careful selection of ELSS funds and a systematic investment approach can help you navigate market fluctuations effectively. 5. Mutual Funds Mutual funds have gained significant popularity in recent years due to their ability to provide diversification and professional management. Mutual fund investments help you gain exposure to a portfolio of stocks, other securities, and bonds, which decrease the risk associated with investing in individual assets. Mutual funds offer various categories, such as large-cap, mid-cap, small-cap, debt, and hybrid funds, catering to different risk profiles and investment objectives. Mutual fund investments allow you to benefit from the expertise of professional fund managers and leverage their in-depth market research. 6. Gold Gold has long been considered a traditional safe-haven investment option, providing a hedge against inflation and economic uncertainties. Investors can choose to invest in gold exchange-traded funds (ETFs), physical gold,  or sovereign gold bonds. The returns on gold are influenced by international gold prices, making it subject to price fluctuations. Gold serves as a diversification tool in an investment portfolio and is suitable for those seeking stability and protection against market volatility. Additionally, gold investments offer the flexibility to convert your holdings into cash easily when required. 7. Real Estate Real estate investments offer the potential for long-term returns and act as tangible assets. Investing in residential or commercial properties can provide rental income and capital appreciation over time. However, real estate investments require significant capital and can be illiquid. It is essential to carefully evaluate factors such as location, market conditions, and legal compliance before venturing into real estate. Real estate can be a viable option for investors seeking a long-term investment avenue and are willing to take on the responsibilities associated with property ownership. Talk To An Expert

As the middle class in India continues to thrive and make significant strides toward financial stability and prosperity, the need for reliable investment plans becomes paramount. Making wise investment choices is key to securing one's financial future and achieving long-term goals. Let's dig deeper into the details of the best investment plans tailored specifically for the middle class in India. By understanding these investment avenues, individuals can make informed decisions that pave the way for financial growth and security. https://www.youtube.com/watch?v=C2K84ePN4IU 1. Systematic Investment Plans (SIPs) Systematic Investment Plans (SIPs) have gained immense popularity among middle-class investors in India. SIPs allow individuals to invest a fixed amount regularly in mutual funds, thus harnessing the power of compounding. This investment avenue provides convenience, flexibility, and the opportunity of investing in diverse asset classes such as equity, debt, or hybrid funds. By investing in SIPs, the middle class can benefit from the potential for higher returns over the long term. Moreover, SIPs also enable investors to initiate with small amounts, making it an ideal investment option for those with limited disposable income. 2, Public Provident Fund (PPF) The Public Provident Fund (PPF) is a government-backed savings scheme that has been a popular choice among the middle class for decades. PPF offers a long-term investment horizon of 15 years, ensuring that individuals can accumulate a substantial corpus over time. This scheme provides a fixed interest rate, which is often higher than that of traditional fixed deposits. Opening a PPF account is easy, as it can be done at designated banks and post offices across India. Additionally, contributions made to a PPF account are eligible for tax deductions under Section 80C of the Income Tax Act. Furthermore, the accumulated amount in a PPF account can be withdrawn tax-free at maturity, making it an attractive investment option for the middle class. 5 Investment Plan every Parent should have Read More 3. National Pension Scheme (NPS) The National Pension Scheme (NPS) is a government-regulated investment plan specifically designed to cater to retirement needs. NPS offers the middle class an opportunity to build a substantial retirement corpus through regular contributions during their working years. The scheme provides a choice of investment options and fund managers, allowing individuals to customize their investment strategy according to their risk appetite. NPS also provides tax benefits under Section 80C, wherein contributions made towards NPS are eligible for deductions. Additionally, partial withdrawals are allowed under specific circumstances, providing individuals with flexibility in managing their financial needs. It's important to note that while NPS ensures security, it may not offer returns as competitive as other investment options. 4. Equity-Linked Savings Scheme (ELSS) Equity-Linked Savings Schemes (ELSS) are mutual fund schemes that combine tax benefits with the potential for higher returns. ELSS funds primarily invest in equities, which offer the opportunity for capital appreciation over the long term. Investments made in ELSS are eligible for tax deductions under Section 80C of the Income Tax Act. ELSS funds have a mandatory lock-in period of three years, encouraging investors to stay invested for the long term. This aligns with the objective of wealth creation, as staying invested for a longer duration allows investors to benefit from the potential growth of the equity market. 5. Fixed Deposits (FD) Fixed Deposits (FDs) have been a traditional investment avenue for risk-averse individuals, including the middle class. FDs provide a secure and predictable return on investment, making them an attractive choice for conservative investors. With flexible tenures and varying interest rates, individuals have the freedom to choose an investment period that suits their needs. Although the returns from FDs may be lower compared to other investment options, they are considered a safe haven for capital preservation. FDs provide a sense of stability and security, which is appealing to middle-class people seeking to protect their hard-earned money. One must remember this is a safe investment option, but FDs hardly give inflation-beating returns. Affordable Investment Opportunities Read More 6. Direct Equity Investment Direct equity investment is an option for individuals from the middle class having a keen interest in the stock market and a willingness to take calculated risks. Investing in individual stocks needs knowledge, thorough research, and a long-term perspective. While direct equity investment can be rewarding, it is important to exercise caution and consider consulting a financial advisor to make informed investment decisions in the equity market. Diversifying investments across sectors and market capitalizations can help mitigate risk. With the potential for higher returns, direct equity investment can be a valuable addition to a well-diversified investment portfolio. Conclusion Investing wisely holds great importance for the middle class to achieve their financial goals and secure their future. Systematic Investment Plans (SIPs), Public Provident Funds (PPF), National Pension Schemes (NPS), Equity-Linked Savings Schemes (ELSS), Fixed Deposits (FDs), and direct equity investment are among the best investment plans in India for the middle class.  By understanding the unique features, risk-reward profiles, and tax implications of these investment options, individuals can make well-informed decisions aligned with their financial aspirations. Remember, investing is a journey that requires discipline, patience, and periodic reviews to ensure that your investments align with your evolving goals and changing market dynamics. Start early, continue to be committed, and reap the rewards of a well-planned investment strategy tailored to your needs. Consult an Expert Advisor

Exchange-traded funds (ETFs) have altered the global financial industry by providing investors with convenient access to foreign markets and a wide range of sectors. However, the increased churn in the ETF market is a natural consequence of such rapid expansion. Some ETFs prosper, while others fail and have to be liquidated or delisted. Although the process of formation and closure represents the constant change of a healthy market, investors are best off avoiding the scary stuff at all costs. The year 2020 saw more than 7500 different ETFs offered in all. Of these 7500, nearly 300 ETFs closed from 2020 until February 2022, almost 4%! Thus, it becomes very imperative for us to study the effects of ETF liquidation and closure. What happens when an ETF closes? An ETF can be closed in two different ways; one is liquidation and the other by delisting. We will see this in detail below. A prospectus supplement will indicate the ETF's last trading date and liquidation date once the decision to disband the ETF has been finalized. "Business as usual" ends at this time or soon after, and the fund stops making new investments as it proceeds to liquidate. As a result, the performance of an ETF diverges from that of its benchmark index. During this time, the ETF issuer will continue to publish an indicative net asset value (iNAV) during the day, which is used when purchasing or selling the ETF. It's generally a good idea to sell any shareholdings before the end of the trading day. What is liquidation? Investors receive cash payments equal to the NAV whenever an asset is liquidated. Most of the time, this has the advantage of offering you fair value for your shares. Liquidation is vital to investors since they only have two weeks to liquidate their shares once the process starts. Once investors learn that their ETF is in the process of liquidation, they have two choices: selling before the closing date or waiting until the final liquidation. To determine the best course of action, one must read the final prospectus supplement. Liquidation is generally less expensive and time-consuming than delisting the ETF if the issuer decides to do so. What is ETF Liquidity? Read More What is delisting? Delisting is significantly more time-consuming for investors who fail to liquidate holdings before the last trading day. When this happens, they must trade OCT, i.e., over the counter, which is time-consuming and often costly compared to buying and selling on an exchange. That is why delisting is vital to investors; failing to keep track of the closing date might negatively affect your investment portfolio. Source: freepik Some examples of ETF closures are DateFundTicker3/7/2022Xtrackers Eurozone Equity ETFEURZ1/14/2022Direxion Dynamic Hedge ETFDYHG12/23/2021Credit Suisse FI Large Cap Growth Enhanced ETNFLGE12/15/2021iShares iBonds Dec 2021 Term Corporate ETF        IBDM12/15/2021Invesco BulletShares 2021 USD Emerging Markets Debt ETFBSAE Negative impacts of ETF closures Impact on investors: Investors face at least four chief risks when an ETF is closed, i.e., liquidated or delisted. Reinvestment Risk: The investor must now find a new investment avenue after cashing out of the delisted or liquidated ETF. It is an intrinsically risky undertaking, especially considering the opportunity cost of exploring new investment alternatives and their benefits and drawbacks. Added Expenses: A delisted ETF incurs additional OTC costs for investors. Additional charges are charged when starting a new investment, which may have a fee structure that differs from the earlier one. Loss of ETF Value: While the investor didn't walk away with anything, it's doubtful that he achieved the investment goals in the case of closure. Investors don't choose ETFs they think will fail in the future. Investors face value loss that they must up elsewhere. Tax Burden: One of the most significant downsides of ETF closures is an increase in the tax burden due to unanticipated capital gains. Impact on Issuer: The major disadvantage of closure for an issuer is the danger of losing its reputation. Reputation Risk: An issuer whose fund is liquidated or delisted may have a difficult time attracting new investors in the future. Advisors are less inclined to endorse ETFs from issuers with a history of closing funds for various reasons. Ways to predict which ETF may be vulnerable to closure 1. Low AUM: One of the best predictors of closure risk is a low AUM. After all, funds that manage millions of dollars in assets are far too profitable to shut down. 2. Issuer strength: Look for ETFs sponsored by prominent, well-known companies such as iShares, State Street, Vanguard, Invesco, and First Trust. A minor sponsor may find it more difficult to continue operating an ETF if it does not initially attract assets. 3. Fund ranking: Less popular ETFs are more prone to closure; avoid them! 4. Trading volume: ETFs actively traded are more likely to change at the underlying assets' value. 5. Appeal: Look for ETFs with a broad investment approach, such as S&P 500 index funds, unless one is an experienced player. Over time, exact methods may not be able to attract adequate assets. Investors can lessen their chances of going through an ETF liquidation by conducting thorough research on the ETF and avoiding a probable closeout. There's no need to panic if the ETF liquidates; simply investigate the next fund and make sure to understand what one is getting into. FAQs What happens to the assets in an ETF when it closes? When an ETF closes, its assets undergo a liquidation process, where they are sold off in the market. The resulting proceeds from the asset sales are then distributed among the shareholders of the ETF. This distribution is typically done on a pro-rata basis, ensuring that each investor receives their fair share of the remaining value. One advantage for investors is that this process is usually tax-free, meaning they don't have to worry about incurring additional tax liabilities when the ETF closes. It provides a relatively seamless exit strategy for investors who no longer wish to hold shares in a particular ETF. Can investors experience financial losses when an ETF closes? While it is possible for investors to face financial losses when an ETF closes, such occurrences are relatively rare. In the event of an ETF closure, investors may potentially experience losses if the liquidation value of the ETF's assets is lower than the value of the shares they hold. However, it's important to note that ETF sponsors prioritize ensuring investors are adequately reimbursed for the full value of their shares. This reimbursement helps mitigate the risk of significant financial losses. As a result, investors are typically provided with a safety net that helps protect their investment capital in the event of an ETF closure. How can investors prevent investing in an ETF that might close? To avoid investing in an ETF that might face closure, investors can adopt a diligent approach. They should conduct comprehensive research on the ETF they are considering. This research should encompass various factors, such as analyzing the ETF's underlying holdings, assessing its historical performance, and evaluating its management fees. By delving into these aspects, investors can gain a better understanding of an ETF's stability and its potential for long-term success. Furthermore, investors can look for ETFs with a larger asset base. ETFs that have amassed a significant amount of assets are generally more financially stable and less likely to face closure. Consult an expert advisor to get the right plan for you TALK TO AN EXPERT

E-commerce saw a big boost during the pandemic wave. Making investors ask - is it time for e-commerce or e-retail ETFs?  According to UNCTAD, global e-commerce jumped to more than $26.7 trillion! Let's take a look at some UNCTAD statistics from 2018-2020.  EconomyOnline retail sales ($ billions)Retail sales ($ billions)Online share (% of retail sales) 201820192020201820192020201820192020Australia13.514.422.92392292425.66.39.4Canada13.916.528.14674624523.03.66.2China1,060.41,233.61,414.35,7555,9575,68118.420.724.9Korea (Rep.)76.884.3104.442340640318.220.825.9Singapore1.61.93.23432274.75.911.7United Kingdom84.089.0130.656556456014.915.823.3United States519.6598.0791.75,2695,4525,6389.911.014.0 As seen clearly from the above table, e-commerce has seen rapid growth and will continue due to the very structure of e-commerce. The convenience it delivers to the buyers is unparalleled, and hence very rarely will it have a chance to slow down or lose steam.   In other words, while e-commerce growth is slowing in the short term, the industry's long-term bright growth prospects have not changed.  ETFs, particularly thematic ETFs, offer diversification benefits. Because even if an industry's growth increases, there will be some champions and some laggards, investors have embraced ETFs related to a long-term theme, such as cloud computing, clean energy, infrastructure, or online retail, in recent years.   E-commerce is a relatively new entrant to this list but has incredible potential. As so many companies are participating in e-commerce, subscribing to an e-commerce exchange-traded fund (ETF) could provide you, the investor, exposure to tech-savvy organizations across a wide range of industries.  Pros & Cons of Investing in e-retail ETFs  Pros  E-commerce is a massive industry that has only become bigger as technology has progressed. ETFs for e-commerce allow you to participate in this rapidly increasing market.  If one wishes to invest in e-commerce, businesses in various industries use digital sales and payments, including clothes, food delivery, and general retail. This helps diversify one's portfolio because the fund will likely include a wide range of businesses.  Cons  E-commerce is dominated by Amazon, Walmart, and eBay, making it tough to locate opportunities.  Investing purely in the e-commerce market may be challenging because many of the largest e-commerce companies do more than sell things. For instance, Amazon has an AWS cloud computing arm with its e-commerce portal.   What are Vanguard ETFs? Read More Few good e-commerce ETFs  The Amplify Online Retail ETF (IBUY) invests in companies that generate at least 70% of their income from online sales. The ETF's top holdings include well-known clothes, logistics, and food delivery services such as Etsy, DoorDash, and Revolve.  ProShares Online Retail ETF (ONLN) has a lower expense ratio than the Amplify Online Retail ETF and a less diversified portfolio. It invests significant of its assets in major e-commerce companies such as Amazon, Alibaba, and eBay.  The Emerging Markets Internet + Ecommerce ETF (EMQQ) tracks online businesses in countries other than the United States. The fund's assets are primarily invested in Chinese companies, although it also has stock in South Korea, India, Argentina, South Africa, Brazil, and Singapore.  Suppose you want broader exposure to internet companies than an ETF that focuses primarily on businesses that offer things to clients online. In that case, the Invesco NASDAQ Internet ETF (PNQI) is a solid choice. Including service providers and retailers, such as web hosting and search engines. Adobe, Amazon, and Alphabet are among the top holdings.  Paying people is a significant element of e-commerce. Many software companies have sought to make it as simple as possible for consumers to send and receive money from each other and businesses.   The ETFMG Prime Mobile Payments ETF (IPAY) invests in firms that help people make purchases online, such as American Express, Mastercard, Visa, Square, and PayPal.   Every e-commerce business needs to take payments, this is a one-of-a-kind opportunity for an investor to get exposure to the industry and its primary service providers.  ParameterAmplify Online Retail ETF (IBUY)ProShares Online Retail ETF (ONLN)Emerging Markets Internet + Ecommerce ETF (EMQQ)Invesco NASDAQ Internet ETF (PNQI)ETFMG Prime Mobile Payments ETF (IPAY)IssuerHANetf, EMQQ Index, and Big Tree Capital, LLCProSharesHANetf, EMQQ Index and Big Tree Capital, LLCInvescoETFMGInception DateApril 20, 2016July 13, 2018Nov. 12, 2014June 12, 2008July 15, 2015Expense ratio0.65%0.58% 0.86%0.60%0.75%AUM (as of 2021)$906.7 million$875.6 million$1.29 billion$1.06 billion$1.22 billion3-year return (as of 2021)28.5%20.1%16.2%20.9%16.7% E-commerce is a growing industry with the potential to develop significantly. Investing in an e-commerce ETF provides exposure to the online sales business and an opportunity to wager on societal trends such as food and apparel delivery and online payments. FAQs What is a retail ETF? A retail ETF is an industry-specific exchange-traded fund (ETF) that invests only in companies that sell retail merchandise to consumers. For example, Amplify Online Retail ETF (IBUY) is a retail ETF and its top 5 holdings are companies like Carvana Co, Affirm Holdings Inc, Netflix Inc, Figs Inc, and Amazon.com Inc. What are the benefits of investing in retail ETFs? E-commerce is a massive industry that has only become bigger as technology has progressed. ETFs for e-commerce allow you to participate in this rapidly increasing market.  If one wishes to invest in e-commerce, businesses in various industries use digital sales and payments, including clothes, food delivery, and general retail. This helps diversify one's portfolio because the fund will likely include a wide range of businesses. What are some retail ETFs to invest in? The Amplify Online Retail ETF (IBUY) invests in companies that generate at least 70% of their income from online sales. The ETF's top holdings include well-known clothes, logistics, and food delivery services such as Etsy, DoorDash, and Revolve.  ProShares Online Retail ETF (ONLN) has a lower expense ratio than the Amplify Online Retail ETF and a less diversified portfolio. It invests significant of its assets in major e-commerce companies such as Amazon, Alibaba, and eBay.  The Emerging Markets Internet + Ecommerce ETF (EMQQ) tracks online businesses in countries other than the United States. The fund's assets are primarily invested in Chinese companies, although it also has stock in South Korea, India, Argentina, South Africa, Brazil, and Singapore. Consult an expert advisor to get the right plan for you TALK TO AN EXPERT

Exchange-traded funds (ETFs) are well-known for their low costs and liquidity, but many investors ignore an additional, undervalued benefit of ETFs: tax efficiency. In this crucial aspect, ETFs outperform Mutual Funds by a long shot.   ETFs may owe this tax efficiency to their very structure and their trading, creation, and redemption. Structural components contribute to tax efficiency; lower turnover in passive strategies than active strategies, secondary market trading possibilities, and the structural tax advantages of in-kind redemptions.  As a result, ETF investors have more control over when they pay taxes, i.e., when they sell their shares, rather than when other shareholders buy and sell.   In the USA in 2018, only 10% of ETFs paid out capital gains to investors, but 61% of mutual funds did. Mutual funds paid an average of 4.5 percent capital gains as a percentage of NAV, while ETFs paid only 0.2 percent.   Source: pixabay How are ETFs so tax efficient 1. Passive turnover   According to Morningstar, only 4% of mutual funds are passive, compared to 89 percent of ETFs. Passive strategies, on average, have lower portfolio turnover than active methods.   As a result of the decreased turnover, there are fewer instances of securities selling at a profit, and hence fewer opportunities for shareholders to receive capital gains.   Thus, the very basis of the management of a fund leads to lower or higher tax efficiency. A passive ETF is more tax-efficient than actively managed ones, as passive strategies eliminate the need for continuous rebalancing.   2. Secondary market trading  Unlike mutual funds, exchange-traded funds (ETFs) get traded on stock exchanges. Only 10% of ETF trades affect the underlying portfolio through the primary market, with the rest occurring between investors in the secondary market.   On the other hand, all activity of mutual funds has to occur in the primary market, affecting the underlying portfolio.  When a mutual fund investor requests a redemption, the fund has to sell the securities to cover the obligation. On the other hand, when an individual investor wishes to sell an ETF, he simply sells it in the secondary market. For the ETF, there is no bother and so no capital gains transaction.  This structural difference limits the fund-level transactions. As a result, compared to mutual funds that invest in similar assets, this has a lower cost of ownership and higher returns.  ETFs vs Stocks Read More 3. Structure  Instead of selling securities for cash, the ETF issuer can satisfy redemptions and portfolio rebalance in-kind (exchanging securities for ETF shares) in the ETF primary market.   This in-kind transaction does not result in a taxable event for the fund. It can protect fund shareholders from capital gains from other shareholders' buying and selling decisions.  When an AP redeems ETF shares, the issuer does not immediately rush to sell ETF shares to pay the AP in cash. Instead, he's paid "in-kind" by delivering the ETF's underlying assets.   No capital gains, therefore. Additionally, the ETF provider selects the stocks to be given to the AP, making sure that the shares with the lowest tax liability are given to the AP.  This leaves the ETF issuer with only shares acquired at or even above the market rate, lowering the fund's tax burden and, as a result, providing investors with better after-tax returns.  For some ETFs, the mechanism does not augur well. Fixed-income ETFs are less tax-efficient than other ETFs due to higher turnover and recurrent cash-based creations and redemptions.   That said, ETFs win hands down, with two decades of evidence pointing out their high tax savings compared to any other investment avenue.  FAQs Are ETFs a good investment for a new investor? Exchange Traded Funds are usually considered to be low-risk investments as not only are they low-cost but also hold various stocks and securities, thus increasing diversification. What is an ETF? An ETF stands for exchange-traded fund (ETF). One single ETF is a basket of securities that can be bought and sold like mutual funds through a brokerage firm. ETFs track a specific index such as S&P, sector, commodity, or other assets. Much like stocks, ETFs can be traded on the market. How to invest in ETFs? You can invest in ETFs using the EduFund App. All you need is a US account to start investing. Get started using this link Consult an expert advisor to get the right plan for you TALK TO AN EXPERT

With the tremendous growth of the technology industry, tech stocks have established a solid footing in the stock market, making it an attractive yet challenging place for first-time investors.   ETFs (exchange-traded funds) can significantly simplify the investing process. ETFs tempt investors who want to minimize the risk of engaging in individual securities while generating income over time.   Tech industry exchange-traded funds (ETFs) trade in shares of electronics and information technology manufacturers and service providers, which make up the technology sector.   This industry's technological solutions vary from consumer items to enterprise software. These companies' stocks often trade at high earnings multiples compared to other sectors and have a history of driving market cycles.   Small-cap and microcap companies, as well as large-cap and microcap companies like Apple Inc. (AAPL), Microsoft Corp. (MSFT), and Alphabet Inc. (GOOG), contribute to the sector's outlook and growth.  What are technology ETFs? Technology ETFs could be an excellent place to start for market players interested in investing in this industry. Continue reading to learn more about what you should know before buying a technology ETF.  There are roughly 110 technology ETFs in the United States, according to ETF.com. Some are focused on specific sectors, like artificial intelligence ETFs or fintech ETFs, but the Invesco QQQ Trust ETF is the largest technology ETF with remarkable capital gains (NASDAQ: QQQ).   It had US $195.26 billion in assets under management as of February 4, 2022.  Despite the generic nature of most tech ETFs, investors still have the option of selecting the market that most interests them. Apple (NASDAQ: AAPL), Microsoft (NASDAQ: MSFT), and Meta Platforms (NASDAQ: FB) are among the most crucial tech businesses tracked by the iShares US Technology ETF (ARCA: IYW).  The PureFunds ISE Mobile Payments ETF (ARCA: IPAY), which tracks the mobile payments industry, is another ETF that monitors a specific market within the tech sector. PayPal (NASDAQ: PYPL), Mastercard (NYSE: MA), and Visa are among its top holdings (NYSE: V).  There are several high-performing options for investors wishing to obtain exposure to the lucrative semiconductor business, including the iShares Semiconductor ETF (NASDAQ: SOXX) the VanEck Semiconductor ETF (NASDAQ: SMH), and the Direxion Daily Semiconductor Bull 3x Shares (NYSE AMERICAN: SOXL).  Source: pixabay Based on data obtained from the ETF database as of February 2022, some of the better ETFs are ParameterTechnology Select Sector SPDR Fund (XLK)First Trust NASDAQ Technology Dividend Index Fund (TDIV)ProShares S&P Technology Dividend Aristocrats Fund (TDV)IssuerState StreetFirst TrustProSharesPerformance Over One-Year12.6%11.8%10.5%Expense Ratio0.10%0.50%0.45%Annual Dividend Yield 0.67%1.78%1.11%Three-Month Average Daily Volume13,524,775106,04812,147Assets Under Management$45.9 billion$1.8 billion$110.7 millionInception DateDec. 16, 1998Aug. 13, 2012Nov. 5, 2019 XLK tracks the Technology Select Sector Index, broadly indicative of the S&P 500 Index's technology sector.   Companies involved in technology hardware, storage, peripherals; software; communications equipment; semiconductors and semiconductor equipment; and various related services are the focus of the fund.  TDIV follows the NASDAQ Technology Dividend Index, an index of technology and communications businesses listed on the NASDAQ, NYSE, or NYSE Amex.   Companies must meet minimum market capitalization, average daily dollar trading volume, and yield standards to be included in the index and have paid an ordinary dividend in the previous 12 months.  How ETFs are different from mutual funds? Read More TDV invests in the S&P Technology Dividend Aristocrats Index, which comprises well-established technology companies that have grown their dividends for at least seven years.   The index's companies have solid fundamentals and a successful growth and profitability track record. The data processing and outsourced services firms, semiconductors, and tech hardware, storage, and peripheral companies are the significant holdings of the large-cap growth fund.  Even if investors are unsure about market intricacies, tech ETFs can help them get started. They're seen as a safe and straightforward method to start in the industry, with a better chance of making a profit.   Market participants who want more control over their technology stock investments should go elsewhere. ETF shares don't provide much flexibility because they simply track an index or commodity. FAQs What are technology ETFs? Technology ETFs could be an excellent place to start for market players interested in investing in this industry. Continue reading to learn more about what you should know before buying a technology ETF.  There are roughly 110 technology ETFs in the United States, according to ETF.com. Are ETFs a good investment for a new investor? Exchange Traded Funds are usually considered to be low-risk investments as not only are they low-cost but also hold various stocks and securities, thus increasing diversification. How to invest in ETFs? You can invest in ETFs using the EduFund App. All you need is a US account to start investing. Get started using this link - https://edufund.in/us-market TALK TO AN EXPERT

ETFs (exchange-traded funds) are a straightforward method to begin investing. ETFs are easy to understand and can generate significant returns with little cost or effort.  Here is everything you need to know about ETFs, including how they work and how to do investing in US ETFs. What is an exchange-traded fund (ETF)?  An ETF, an exchange-traded fund, enables investors to buy many shares or bonds at once. Investors purchase ETF shares, and the funds are employed to invest in a specific way.   If you buy a Nasdaq 100 ETF, your money is put in the index's 100 companies. The ETF trading on the exchange is precisely like a regular stock.   Throughout the trading day, ETFs are bought and sold, and the price of an ETF share might swing above or below its net asset value (NAV) according to supply and demand.  Although ETFs and Mutual Funds appear to be similar on the surface, both are bundles of assets in which thousands of owners regularly invest; they have a few key differences.   Mutual Funds, for example, are usually actively managed. Unlike ETFs, which trade continuously throughout the day, mutual funds are transacted once daily.   Mutual fund prices are determined once every 24 hours based on the NAV at the end of the trading day.  ETFs have two categories: passive and active. Passive ETFs (also known as index funds) monitor a stock index like the S&P 500. Passive ETFs replicate the performance of an index. Active ETFs hire portfolio managers to invest their money. Active ETFs aim to outperform a benchmark index.  5 Steps on how to Invest in US ETFs The first step is to open an account with a brokerage firm. This account can be used to buy and sell stocks, ETFs, commodities contracts, and other securities. For all deposits, the broker acts as a custodian. A broker which provides services in India and the USA must be selected.  Make an ETF investment strategy that suits your goals and risk profile.  Once the investor decides on his investment strategy, he should focus on the ETFs. He should research the various types of ETFs available in the market.  The final step in the ETF purchase process is to purchase the ETF. The investor must first deposit monies into the brokerage account from which the purchase will be performed. After ensuring that the funds are sufficient, the investor must look for the ETF ticker symbol and make a buy order. The investor must also specify the number of ETF shares he wants to buy. ETF shares cannot be purchased in fractions in most cases. Confirm the order.   Since the investor has purchased the shares, he must prepare an exit strategy for minimizing losses (if any) or minimizing capital gains taxes.  What to look for in the ETFs before buying/investing?  Expense ratio: Expenses eat into the earnings of the investor, so the smaller the expense ratio, the better. In addition, an investor should consider the costs charged by an ETF to maintain a portfolio.  ETFs often have lower costs than actively managed funds since they track an underlying index. When purchasing specialty ETFs, however, an investor must use caution.  Volume: ETF volume reflects the ETF's trading potential and, as a result, its liquidity. Higher volume means lower spreads and more liquidity.  Underlying Holdings: Look at the underlying holdings of the ETF.   Performance: Look at the fund's past performance and compare that to its peers.   Market price: An ETF should ideally trade near its NAV. Before making any acquisitions, investors should consider the NAV.   Beta: Beta measures how much security is likely to go up or down daily concerning the tracking Index. It is, in essence, a measure of a security market or systemic risk.   For example, a stock having a beta =1.0 swings in tandem with the general market, so a 1% increase or decrease in the underlying index is mirrored by a 1% gain or fall in the ETF's price.  Alpha: Alpha is referred to as 'excess return', which measures the return earned by a stock above or below the market's demand for its risk class.  Age of the ETFs: The age of the fund can be used as a proxy for the reliability of the fund. A fund that has been around for a considerable time must have a proven track record.   Why should you invest in US ETFs?  All key US stock exchanges have companies listed worldwide, making it a potential investment destination. If you invest in the US share market, you diversify your financial portfolio while investing in worldwide companies.   The equity market in the United States is the largest in the world. The US financial markets accounted for 54.5 percent of worldwide stock market value as of December 2021.  Investments in US stocks can help you get a good return on your money because global corporations are there, and the return you receive will be high due to various factors.  Unlike India, you can hold US stocks in fractions. After all, buying a single Google share is out of range for most individuals. You can own a part of the company for as little as Rs 1,000 or even less.  According to historical data, the Indian Rupee has been losing value against the US dollar, and there is a probability that this trend may continue.  The rupee-to-dollar exchange rate influences the profit you make from foreign equities. Any rupee weakening helps boost profits if dollar-denominated investments such as US shares appreciate.   Even if global markets are disappointed or remain steady, you benefit if the rupee falls against the dollar.  How to send money to the United States?  All residents, including minors, are entitled to freely transmit up to USD 2,50,000 per financial year (April – March) for any permissible current or capital account transaction, or a combination of both, under the Liberalized Remittance Scheme.  Furthermore, residents can use the foreign exchange facility for up to USD 2,50,000 for the purposes listed in paragraph 1 of Schedule III of the FEM (CAT) Amendment Rules 2015, dated May 26, 2015.  Indian residents can use the LRS to send money overseas for tourism, education, medical treatment, stock and property purchases, care of family living abroad, presents, and donations.   Individuals may also create, manage, and retain foreign currency deposits with foreign banks to conduct transactions. The scheme does not cover corporations, partnerships, trusts, etc.  All about taxation when investing in the US Market Let us sum up the taxation aspect in an easy-to-understand flowchart  1. Dividends  An intended distribution of a company's profit to its shareholders is known as a dividend. You must thus pay the tax on the dividend you receive because your investment is lucrative.  2. Capital gains on the sale  You can choose to make money or lose money when you sell a stock. If you experience a loss, no tax is owed; but, if you experience a profit, you must pay capital gains tax.  The capital gains tax rate is based on how long the stock has been held. Foreign investors in US stocks are not subject to the country's capital gains tax. However, the Capital Gains Tax plan in India requires you to pay taxes.  a) Long-Term Capital Gains Tax Rate (LTCG)  If you own a stock for more than 24 months, the profit from selling it would be taxed at the Long-Term Capital Gains rate in India. Long-term capital gains are taxed at a rate of 20%. (Plus, any additional surcharge and cess).  b) Short-Term Capital Gains Tax Rate (STCG)  If a sale is made before the 24-month period, it will be considered normal income, and the tax rate will depend on your tax bracket.  Understanding some critical ETF terms  Smart Beta ETFs - "Factor-based" or "Strategic Beta" ETFs are other names for Smart Beta ETFs. These ETFs wisely select their underlying assets in keeping with their namesake.  These ETFs choose the primary assets based on factors other than market capitalization.  ETF liquidity - 2 different types of allied liquidities - Primary and Secondary.  Primary Liquidity is the Liquidity associated with the ease of creating and redeeming ETF shares with the help of underlying securities.   The Liquidity of the underlying securities plays a significant role in determining the Liquidity of the ETF shares in the primary market.  Secondary Liquidity is the Liquidity associated with the already created ETF shares in the stock market. This Liquidity is generally the visible Liquidity on the market.   The non-institutional investors or investors with a smaller scale of operations generally are concerned with this type of liquidity. Investors buy and sell ETF units on the secondary market without the involvement of the ETF issuer.  Tracking difference - which can be either positive or negative, indicates how well a fund has outperformed or underperformed its benchmark index.   It's derived by subtracting the fund's total return from the benchmark's total.  Tracking error - reflects how much variability occurs among the individual data points that make up the fund's average tracking difference.  The value of a fund's assets subtracted the value of its liabilities is known as net asset value (NAV). The term "net asset value" is frequently used in the context of mutual funds and ETFs, and it refers to the value of the assets owned in the fund.  If the ETF's price is higher than its NAV, it is considered to be trading at a "premium." In contrast, if the ETF's price is below its NAV, the ETF is considered to be trading at a "discount." Spread - At any given point in the market, there are two prices: the sale price, i.e., 'ask' and the other to buy, i.e., 'bid'. Buyers of ETFs aim to pay a fair price and, if possible, a discount on the market price of the core securities in the ETF, while sellers want to get the highest price -leading to the existence of spreads.   International investments allow you to diversify your portfolio and acquire exposure to new markets. Geographic diversification can help mitigate country risk, such as the chance of bad events affecting India's domestic economy.   Furthermore, when comparing investing in Indian vs US markets, US stocks have traditionally displayed lower volatility, higher returns, and greater foreign exposure.  FAQs What is an exchange-traded fund (ETF)? An ETF, an exchange-traded fund, enables investors to buy many shares or bonds at once. Investors purchase ETF shares, and the funds are employed to invest in a specific way.   If you buy a Nasdaq 100 ETF, your money is put in the index's 100 companies. The ETF trading on the exchange is precisely like a regular stock. What to look for in the ETFs before buying/investing?  There are many parameters to look out for while buying an ETF: performance, expense ratio, volume, market holdings, age of the ETFs, etc. What are the two types of ETFs? ETFs have two categories: passive and active. Passive ETFs (also known as index funds) monitor a stock index like the S&P 500. Passive ETFs replicate the performance of an index. Active ETFs hire portfolio managers to invest their money. Active ETFs aim to outperform a benchmark index.  Consult an expert advisor to get the right plan for you TALK TO AN EXPERT

"Man is not what he thinks he is; he is what he hides." ― André Malraux.  Similar is the case with our ETFs. ETFs are not what they seem to be. Several ETFs are named similarly, which is often deceptive to a layman investor.  Investors must evaluate a variety of variables while choosing the right ETF. ETFs' costs, tracking, structure, and liquidity are all critical. Even with these factors in place, an ETF's results primarily depend on the underlying assets at the end of the day.  This article aims to help the investor know the nitty-gritty of the ETF nomenclature and why an investor should not go by just the name of the ETF and should also check under the hood.   Let's take an example and understand why this is the case. Let's take 2 ETFs tracking emerging markets:  iShares Core MSCI Emerging Markets ETF (IEMG)   iShares MSCI Emerging Markets ETF (EEM).  ParameterIEMGEEMTickeriShares Core MSCI Emerging Markets ETF (IEMG)iShares MSCI Emerging Markets ETF (EEM)IssuerBlackrockBlackrockExpense Ratio0.11%0.68%AUM$74.02B$27.94BAverage Daily $ Volume$965.69M$2.10BUnderlying IndexMSCI Emerging Markets Investable Market IndexMSCI Emerging Markets IndexMedian Tracking Difference (12 Mo)-0.40%-1.08%5-year annualized performance7.24%6.44% Country-wise holdings:  Source: etf.com Source: etf.com Sectoral weightage:  Source: etf.com Source: etf.com The above two funds are very similar, yet they are slightly different and have given separate returns over the same period. The two funds track emerging markets and also follow the same market classification given by MSCI.   Still, they have different tracking indices, which differ very slightly. As seen above, IEMG tracks the MSCI Emerging Markets Investable Market Index, and the EEM tracks the MSCI Emerging Markets Index, which are two different indices with almost the same name!  Direct equity vs. Investment in mutual funds? Read More The case was not very severe in our example; what if the two ETFs tracking very similar markets gave drastically different returns?   Frontier markets made a big impression in 2013, outpacing the BRICs and other developing markets by a wide margin. Frontier markets are developing-world capital markets that are less developed.  Because it is too tiny, has too much inherent risk, or is too illiquid to be termed an emerging market, a frontier market is a country that is more established than least developed countries (LDCs) but yet less established than emerging markets. Pre-emerging markets are another name for frontier markets.  ETFs investment strategy for Beginners Read More The iShares Frontier 100 ETF (FM) and the Guggenheim Frontier Markets ETF are the two broad frontier market ETFs currently available (FRN).  You'd believe they're the same fund because they both claim to have broad exposure to frontier markets.   However, if you had invested in the wrong one, you would have had no idea that frontier markets performed well in 2013. FM returned over 25% in 2013, whereas FRN returned -13 %. That's a 38 percent difference in returns between the two funds!  FRN uses the BNY Mellon classification system and is only allowed to retain depositary receipts. As a result, the underlying basket gives you access to nations like Chile, Colombia, Egypt, and Peru, which account for more than 70% of FRN's weighting, even though MSCI, FTSE, and S&P all classify them as emerging.   Meanwhile, FM adheres to MSCI's classification system and is authorized to hold local securities - this gives FM a preference for Saudis like Kuwait, Qatar, and the United Arab Emirates, as well as African nations like Nigeria and Kenya.  The lesson here is to not assume that a fund will cover a country, sector, location, or theme precisely as you think based on its name. Checking under the hood is the key!  FAQs What is an ETF? An ETF stands for exchange-traded fund (ETF). One single ETF is a basket of securities that can be bought and sold like mutual funds through a brokerage firm. ETFs track a specific index such as S&P, sector, commodity, or other assets. Much like stocks, ETFs can be traded on the market. Are ETFs a good investment for a new investor? Exchange Traded Funds are usually considered to be low-risk investments as not only are they low-cost but also hold various stocks and securities, thus increasing diversification. How to invest in ETFs? You can invest in ETFs using the EduFund App. All you need is a US account to start investing. Get started using this link Consult an expert advisor to get the right plan for you TALK TO AN EXPERT

So, why do we need to know the difference between exchange-traded funds and mutual funds in the very first place? ETFs are very similar to Mutual Funds, but they are not mutual funds. It's just a matter of grasping the differences between the two.   We at EduFund believe that understanding where each of the instruments makes the most sense, and the investor just doesn't blindly follow the crowd and the trend.  At the very outset, let's know why they are so similar before diving into their differences. Exchange-traded funds and Mutual Funds represent a basket of professionally managed securities, such as stocks, bonds, currencies, commodities, real estate, etc.   These securities can either be thematic or also depend upon the type of mutual fund or the ETF you choose. Both offer various investment options and are managed by professional portfolio managers.   Thus, saving our time and energy in research.  The ETFs and Mutual funds are highly diversified because of the basket of securities. Thus, they are less risky than investing in individual securities like stocks, bonds, commodities, currencies, etc.   How does this help reduce risk? Imagine if you are holding stock that is performing poorly, and thus your return will also be poor; perhaps you may lose money too.   However, suppose you have an ETF or a mutual fund. In that case, this poor performance of that stock may be overdone by the good or average performance of other stocks and assets, which will give you a better return than holding a single asset otherwise.  The most important difference between ETFs and Mutual funds is that an ETF is tradeable on the stock exchange, i.e., its trading is just like a simple stock on the National Stock Exchange (NSE) or the Bombay Stock Exchange (BSE) if it's traded in Indian markets or it will be listed on the New York Stock Exchange or the Nasdaq if it's to be tradeable in the United States of America.   On the other hand, Mutual Funds’ listings are not done on the stock markets; they must be purchased manually from the fund either through your financial advisor or through online brokers.  The ETFs are easily translatable, i.e., they can be sold or purchased at any point in the day, just like a stock. However, for mutual funds, this happens only once during the day after the market has closed.   This buying or selling of mutual funds is through the mutual fund company based upon the investor's instructions - this delay can be very costly if the market fluctuations are very dynamic.   While easy and anytime trading of ETFs sounds cool, not all ETFs are as tradable. This leads to illiquidity concerns.  Source: Pixabay Generally, an investor purchases the mutual fund at the price of its NAV, but on the other hand, ETFs are bought at the prevailing market price, which is typically near the NAV but not the same.   Hence, most mutual funds allow automated transactions but ETFs do not because of price volatility.  Generally, ETFs have a lower expense ratio as compared the mutual funds. The expense ratio is the fee you pay the manager for managing your securities.   The reason is quite simple when a mutual fund is traded, it leaves a long paper trail, and thus the exchange of hands for this paperwork is more - translating to higher costs for the fund manager, which are imposed upon the investor.   On the contrary, ETFs are traded directly by the investor and thus naturally explain the lower charges.  Based on management, most ETFs are passively managed, whereas there are quite a few mutual funds that are actively managed, but some are passively managed.  What is better?  Well, neither of the two is perfect! You can achieve diversity using any of the two options based on your goals. Naturally, a portfolio balanced by combining both offers greater variety and lower risk.   Notably, there is no reason this must be a tightrope walk situation. Both Mutual Funds and ETFs can live together in a portfolio happily. FAQs Which is better - Mutual Funds or ETFs? Well, neither of the two is perfect! You can achieve diversity using any of the two options based on your goals. Naturally, a portfolio balanced by combining both offers greater variety and lower risk.   What is an ETF? An ETF stands for exchange-traded fund (ETF). One single ETF is a basket of securities that can be bought and sold like mutual funds through a brokerage firm. ETFs track a specific index such as S&P, sector, commodity, or other assets. Much like stocks, ETFs can be traded on the market. What is a Mutual Fund? A mutual fund is a financial trust that collects funds from investors and invests them into different instruments like stocks, bonds, and other money market instruments. How to invest in a Mutual Fund via the EduFund App? Step 1: Log in to the EduFund website or the EduFund app.   Step 2: Complete your KYC and move ahead to create your investment account.   Step 3: Choose the option of mutual fund investments.   Step 4: Analyse your risk profile on the app by answering your household income and expense, the number of dependents you have, the highest level of maturity you have in terms of investments, your period of investment, and similar questions.  Step 5: After answering the above questions, you will know what type of investor you are and the degree of risk you might be willing to take.   The EduFund website or the EduFund app will suggest some mutual funds you might want to invest in, with a recommended SIP value.  Step 6: Choose the fund and start investing. Consult an expert advisor to get the right plan for you TALK TO AN EXPERT

In the previous article, we discussed the types of ETFs. In this article, we will discuss how much exposure ETFs provide. Exchange-traded funds are a lot like millennials: Born in the early 1990s, it didn't become relevant until after the recession of 2007 - 09, but it's been a force to be reckoned with ever since.   ETFs in the United States had $530 billion in assets in 2008. Today, that figure is estimated to be around $4.37 trillion.  Most investors today choose ETFs to tap into the underlying advantage of diversification that comes with it. Some investors also choose ETFs to access certain asset classes or investment patterns.   For instance, investors who want to preserve their capital will try to invest in bond ETFs and investors who want exposure to blockchain will invest in blockchain-exposed ETFs.   As a result, investors must understand what an ETF owns and how it came to own the securities in its portfolio. There are 63 different broad-based US large-cap ETFs to choose from.   Investors may feel they are all the same because they all draw from the same universe of 300 or 500 if you consider the S&P 500 a large-cap index of US-listed stocks, but this is a risky assumption.  ETFs can have various strategies of exposure to specific underlying indices.   Equally weighted ETFs   Equal-weighted indexes are precisely what they sound like. Regardless of how big or small a firm is, every stock in the index has the same weight.  As a result, even Apple will have the same weight as the tiniest business in the S&P 500. The Invesco S&P 500 Equal Weight ETF (RSP) is the most widely traded equal-weight ETF.  Let's take an example and construct an equal-weighted ETF  StockReturn (in %)Equal weightContribution Equal Weight (return*equal weight)A4100.4B3100.3C7100.7D4100.4E12101.2F3100.3G1100.1H15101.5I-510-0.5J2100.2TOTAL 10015.4% Thus, the return of our hypothetical ETF is 15.4%  Market weighted ETFs  Like many other stock indices, the S&P 500 is a market capitalization-weighted index. By multiplying the share price by the total number of outstanding shares, the market capitalization of each stock is determined.  The index's weightings will be dependent on the companies with the most significant market capitalizations or values.  While the S&P 500 index comprises several companies, the MWI (market value-weighted index) sector weight is calculated by adding the individual weights of the companies that will make up that sector.  Let's take an example and construct a market-weighted ETF  StockReturn (in %)Market weightContribution Equal Weight (return*equal weight)A4100.4B3200.6C750.35D4150.75E1250.6F350.15G1100.1H15101.5I-510-0.5J2100.2TOTAL 1004.15% Thus, the market-weighted ETF return is 4.15%.   Volatility weighted ETF  Volatility weighting, in particular, does not use low volatility as a selection criterion.   It's a weighting strategy that helps an index diversify by addressing the concentration in cap-weighted indices when a few stocks dominate the index's performance and risk profile.   The objective is to use a company's stock price volatility over the last few trading days to inversely weigh shares. Based on that metric, the least volatile equities are weighted more while the most volatile stocks remain in the portfolio with a lesser weight.  Financial Goals for Millennial Parents Read More Fundamentally weighted ETF  The components of a fundamentally weighted ETF get their rankings according to their fundamentals rather than their market capitalization.   As a result, the ETF only invests in equities that have the prediction to show increased growth.  This ensures that the organizations with the best results in their core business operations receive the most weight, rather than those whose market value has increased.   A constant upward trend in the top line is one of the essential components of a company's long-term growth.  Thus, being cautious about exposure and not going by the name blindly will help select ETFs for the portfolio. FAQs What is the risk exposure of ETF? Most investors today choose ETFs to tap into the underlying advantage of diversification that comes with it. Some investors also choose ETFs to access certain asset classes or investment patterns. For instance, investors who want to preserve their capital will try to invest in bond ETFs, and investors who want exposure to blockchain will invest in blockchain-exposed ETFs. As a result, investors must understand what an ETF owns and how it came to own the securities in its portfolio. Is ETF safer than stocks? Since ETFs are diversified, which means they hold a basket of stocks or other securities, they carry less risk compared to stocks. But ETFs can be bought and traded like stocks. Do ETFs try to beat the market? Most ETFs and index funds try to replicate an index of stocks or other assets. They try to imitate the index and try to match its returns. Does ETF really work? ETFs are generally considered low-risk investments. They are low-cost and offer diversification because they hold a basket of stocks or other securities. Consult an expert advisor to get the right plan for you TALK TO AN EXPERT

So far, 2021 has been kind to investors, with significant market indices finishing the year in the green zone. The S&P 500 and Dow Jones Industrial Averages have risen roughly 27% and 10%, respectively.   From the beginning of the year to 6 months, the Nasdaq Composite surged 22%, whereas the Russell 2000 went up about 14%.  Due to soaring inflation, fatal variations spawning new waves of the COVID-19 epidemic, and supply-chain bottlenecks resulting from pandemic-related restrictions, markets remained unpredictable in 2021.   The Federal Reserve's continued assistance, on the other hand, aided the economy's recovery from the pandemic-induced downturn. The Omicron variant fears have died, and a new conflict between Russia and Ukraine has risen out of the blue.   According to etf.com, investors will rotate to some of the more than 200 thematic ETFs offered by more than a dozen asset managers, which cover a wide range of long-term trends like blockchain, cannabis, cleantech, healthcare innovation, mobile payments, and resource scarcity.   By 2022, thematic ETFs, which are actively managed, will account for 10% of equities net inflows.  There are a few sectors to watch out for in 2022 if an investor wants to invest in ETFs.   Consumers have been fighting growing inflation and COVID-19 variation worries for a long time. Consumers are optimistic about the quick circulation of the coronavirus vaccine and the recovery of the U.S. economy from pandemic-related slumps.   The retail sector was bustling with potential because of high levels of consumer expenditure and rising employment conditions. Thus, the retail industry is sure to boom, and therefore the retail ETFs.  Given the strong trends, investors may consider investing in the retail ETFs below to take advantage of the sales surge. SPDR S&P Retail ETF XRT, Amplify Online Retail ETF IBUY, VanEck Retail ETF (RTH), and ProShares Online Retail ETF (ONLN).  Source: Pixabay Another key sector is the Energy sector. Investors are keeping a careful eye on the energy sector, which is showing signs of revival as world consumption and growth of the economy return to pre-pandemic levels.   Introducing a coronavirus vaccination is slowing the global spread of the coronavirus outbreak. cyclical industries are looking up thanks to the opening of world economies and rising demand.  Invesco Dynamic Energy Exploration & Production ETF PXE, Vanguard Energy ETF VDE, Fidelity MSCI Energy Index ETF (FENY), The Energy Select Sector SPDR Fund (XLE), and iShares U.S. Energy ETF are some of the options available to investors (IYE).  The semiconductor industry has been attracting investors' attention for a long time due to its promising future. WFH and internet-based learning trends fueled demand for processors among Computer manufacturers and data-center operators, thanks to the coronavirus.   Huge public cloud providers are investing in Hybrid cloud because of its growing importance among businesses. This development will most likely benefit data-center chip manufacturers.  Investors should evaluate the iShares Semiconductor ETF SOXX, VanEck Semiconductor ETF SMH, First Trust Nasdaq Semiconductor ETF (FTXL), Invesco Dynamic Semiconductors ETF (PSI), and SPDR S&P Semiconductor ETF (XSD) in light of current market conditions.  Bank ETFs are another set of thematic ETFs that should be considered. The Federal Reserve's decision to reduce its monthly bond purchases could help expand the market. The move to tighter monetary policy will raise yields, which will benefit the financial sector - because higher interest rates will assist banking institutions, insurance firms, discount brokerage houses, and asset managers in making more money. The yield curve (the differential between long- and short-interest rates) might become narrow, which will help banks' net interest margins. As a result, the steeper slope of the yield curve and a minor increase in loan demand are expected to boost the net interest margin, accounting for a significant portion of bank profits.   Invesco KBW Bank ETF KBWB, SPDR S&P Regional Banking ETF KRE, iShares U.S. Regional Banks ETF (IAT), and SPDR S&P Bank ETF (KBE) are some ETFs to be looked out for.  In 2022, the renewable energy sector has the potential to continue to grow. Government regulations that promote renewable energy, significant renewable investment, lowering total costs of generating renewable electricity, and increased usage of electric vehicles (E.V.) may all contribute to space's momentum in 2022.  iShares Global Clean Energy ETF, Invesco Solar ETF, First Trust NASDAQ Clean Edge Green Energy ETF, ALPS Clean Energy ETF, and Invesco Global Clean Energy ETF are some of the ETFs to be examined.  These sectors should be kept in mind while investing in ETFs.  FAQ Is ETF a good investment?   ETFs are generally considered low-risk investments. They are low-cost and offer diversification because they hold a basket of stocks or other securities.     Which is safer ETFs or stocks?   Since ETFs are diversified, which means they hold a basket of stocks or other securities, they carry less risk compared to stocks. But ETFs can be bought and traded like stocks.      Should beginners invest in ETFs?   ETFs are easily traded on the stock market, and they invest in stocks and different other assets. One thing to remember is that most of the ETFs are passively managed. It is wise to talk to saving experts before investing in ETFs for beginners.   Is it risky to buy ETF?   Most investors today choose ETFs to tap into the underlying advantage of diversification that comes with it. Some investors also choose ETFs to access certain asset classes or investment patterns.     For instance, investors who want to preserve their capital will try to invest in bond ETFs, and investors who want exposure to blockchain will invest in blockchain-exposed ETFs.     As a result, investors must understand what an ETF owns and how it came to own the securities in its portfolio.     Since ETFs are diversified, which means they hold a basket of stocks or other securities, they carry less risk compared to stocks.   Consult an expert advisor to get the right plan for you TALK TO AN EXPERT

ETF investment strategy is new to India. In fact, the first successful ETF was introduced in 1993 in the United States to monitor the Standard & Poor's 500 Index (S&P 500), and it is still one of the most popular ETFs today. In India, the first ETF to track the Nifty 50 Index came to the market in 2001. ETFs are a low-cost, low-risk way to invest.  Since it tracks a specific index, such as the NIFTY 100 or S&P 500, and is passively managed. An exchange-traded fund (ETF) is similar to an index mutual fund.   However, today's market has a large number of actively managed ETFs. ETFs, unlike index funds, are marketable securities that may be bought, sold, and traded at an exchange throughout the day, just like any other corporate stock.  Benefits of investing in ETFs ETFs offer liquidity as they are tradable securities on the exchange;  ETFs are very cost-efficient compared to their mutual fund counterparts due to their structure and functioning; ETFs offer unparalleled flexibility due to traceability advantages;  ETFs offer diversification to the portfolio;  ETFs are single transaction securities; when an investor buys a mutual fund, he or she buys a basket of equities made up of small shares spread across various assets. When ETFs are bought in a single transaction, it is akin to owning a tiny portfolio it is beneficial to investors who are keeping track of their performance;  Unlike some mutual funds, ETFs do not have lock-in periods.  ETFs are tax-efficient  Passive management helps get transparent returns akin to the underlying index.   Source: Pixabay Four ETF investment methods 1. Cost-per-dollar Averaging  You acquire assets worth a specific amount of money regularly, regardless of how the asset's price changes. Even if it's a modest amount, if you're new to US investing, you should strive to save a regular amount in an ETF or a set of ETFs every month.   This aids in the development of saving discipline. The goal is to spend time in the market rather than trying to time it.  For instance, using DCA, a $200,000 investment in shares can be made over eight weeks by investing $25,000 each week in the same manner. The trades for lump-sum investing and the DCA approach are in the table below:   DCA @ $25000 per weekLumpsumWeekShare priceNo shares purchasedShare priceNo shares purchased185294852353286291  383301  481309  582305  678321  780313  882305  Total shares purchased 2437 2353Average share price82 85  The entire amount invested is $200,000, with 2,353 shares purchased as a lump-sum transaction. On the other hand, the DCA strategy purchases 2,437 shares, a differential of 84 shares worth $6,888 at the $82 average share price.   As a result, DCA can raise the number of shares purchased when the market is down and decrease the number of shares purchased when the market is up.  2. Asset Allocation  Simply put, you should not invest all your money in a single asset group. Instead, you spread it over various asset classes, such as equities, bonds, and commodities.   ETFs can assist a novice in putting together a basic portfolio allocation. The asset allocation you make should be based on your risk tolerance. When you're in your twenties, for example, stock ETFs may make up the bulk of your portfolio as you have more time on your hands.   You might choose to implement a less aggressive policy as you age and your goals change by increasing the proportion of your assets in bond ETFs.  3. Sector Strategy  ETFs are a great method to gain access to a sector that otherwise would be hard to enter. For example, the ARK Autonomous Technology & Robotics ETF can help you gain exposure to the technology and robotics sectors.   You can also invest in the ALPS Clean Energy ETF if you wish to invest in the clean energy sector. It also allows you to perform a sector rotation, in which you can earn gains from one ETF and switch to another based on economic cycles – this is especially useful in cyclical businesses.  4. Global Diversification  ETFs also allow you to diversify your portfolio regionally and in global markets other than the United States. The Invesco China Technology ETF, for example, tracks the performance of the FTSE China Incl Index.   Tencent Holdings Limited and Baidu Inc. are the firms represented in this 25% Technology Capped Index.   The iShares MSCI Japan ETF monitors the performance of an index of Japanese stocks, with Toyota Motor Corporation and Sony Group Corporation among its holdings. Investing in the United States and other countries allows you to build a global portfolio.  ETFs are a solid long-term investment alternative because they have a lesser expense ratio than active funds. Hence going with them makes the most sense. FAQs What are the benefits of investing in ETFs? Here are the benefits of investing in ETFs - ETFs offer liquidity as they are tradable securities on the exchange;  ETFs are very cost-efficient compared to their mutual fund counterparts due to their structure and functioning; ETFs offer unparalleled flexibility due to traceability advantages;  ETFs offer diversification to the portfolio; What is an ETF? An ETF stands for exchange-traded fund (ETF). One single ETF is a basket of securities that can be bought and sold like mutual funds through a brokerage firm. ETFs track a specific index such as S&P, sector, commodity, or other assets. Much like stocks, ETFs can be traded on the market. How can you invest in ETFs from India? You can invest in ETFs in India via the EduFund App. You can download the App and set up a US account to start investing. Consult an expert advisor to get the right plan for you TALK TO AN EXPERT

In the previous article, we talked about what is healthcare ETF. In this article, we will discuss what is innovative ETF. Many organizations' business models include acquiring fresh perspectives through research and then using those findings to develop and execute new technologies.   Much of these efforts are expected to be in the medical sector, which will have a significant economic impact and spread. The same is true about digital technology, which will likely result in a complete makeover of different sectors like supply chain and sales processes.  Why invest in Innovative ETFs? Innovation propels the global economy. New exchange-traded funds (ETFs) were put out in the market to provide exposure to companies that have developed new goods, patents, or technology.   Index providers assess firms based on their innovation objectives and create unique indices based on this data. Some ETFs which enable you to invest in emerging technology are enumerated in this investment guide.  All ETFs that allow you to invest in innovative technology is on this list.  Innovative ETFs manage $233.55 billion in assets management through 91 ETFs trading on US exchanges. The expense ratio is 0.69 percent on average.  With $182.04 billion in assets, the Invesco QQQ Trust QQQ is the largest Innovative ETF. The best-performing Innovative ETF in the previous year was IEFN, which returned 20.26 percent.   The WisdomTree Battery Value Chain and Innovation Fund WBAT was the most recent ETF in the Innovative category.  List of Top 10 Innovative ETFs Here is a list of the top 10 ETFs based on their AUM. AUM is the Assets Under Management which means the total market value of the investments that a person or entity handles on behalf of investors.   TickerFund NameIssuerAUMExpense ratio3-month TRSegmentQQQInvesco QQQ TrustInvesco$182.04B  0.20%-11.83%Equity: U.S. - Large CapARKKARK Innovation ETFARK$11.99B00.75%    32.77%Equity: Global Broad ThematicFDNFirst Trust Dow Jones Internet Index FundFirst Trust$7.19B  0.51%-18.31%Equity: U.S. InternetKWEBKraneShares CSI China Internet ETFCICC$6.94B0.76%-18.29%Equity: China InternetQQQMInvesco NASDAQ 100 ETFInvesco$3.69B0.15%-11.71%Equity: U.S. - Large CapARKWARK Next Generation Internet ETFARK$2.38B0.83%-34.31%Equity: Global InternetBOTZGlobal X Robotics & Artificial Intelligence ETFMirae Asset Global Investments Co., Ltd.$2.09B00.68%  -18.31%Equity: Developed Markets Robotics & AIROBOROBO Global Robotics and Automation Index ETFExchange-Traded Concepts$1.65B00.95%  -11.82%Equity: Global Robotics & AIARKQARK Autonomous Technology & Robotics ETFARK$1.56B0.75%-18.51%Equity: Global Robotics & AIARKFARK Fintech Innovation ETFARK$1.53B0.75%-34.75%Equity: Global FinTech Now let us look at the top and bottom performers.  Top ETF Performers according to etf.com  Bottom ETF Performers, according to etf.com  Innovation is the very backbone of our society; thus, it's bound to grow in the future and give handsome returns in the long run.   Investments in innovative ETFs are perfect for those who belong to the 'buy and hold' type of investor category and have long-term goals. FAQs Are ETFs a good investment for a new investor? Exchange Traded Funds are usually considered to be low-risk investments as not only are they low-cost but also hold various stocks and securities, thus increasing diversification. Why invest in innovation ETFs? Innovation is the very backbone of our society; thus, it's bound to grow in the future and give handsome returns in the long run.  Investments in innovative ETFs are perfect for those who belong to the 'buy and hold' type of investor category and have long-term goals. Consult an expert advisor to get the right plan for you  TALK TO AN EXPERT