Category Archives: ETF

ETFs (exchange-traded funds) give investors access to a diverse portfolio of equities and bonds.   They're versatile investment vehicles employed in various ways within a portfolio to fulfill different investment requirements and objectives. ETFs, like stocks, can be traded on an exchange at any time of day.  An advantage associated with the ETFs compared to their mutual fund counterpart is the liquidity related to the ETFs. ETFs are a substitute for holding several stocks.   However, unlike stocks, ETFs have a very different connotation associated with liquidity.  ParameterETFSharePriceBased on underlying securitiesBased on the supply and demand metrics of the shareSupplyOpen-ended i.e. can be created and redeemed as per needClosed-endedPrimary Source of liquidityLiquidity of underlying securitiesThe trading activity of the sharesThe best measure of liquidityThe trading volume of underlying securitiesThe trading volume of share What are E-Retail ETFs? Read More Two different types of allied ETFs liquidities - Primary and Secondary Liquidity.  Primary liquidity  The primary market is where the process of creation and redemption takes place. If a designated broker or market maker sees a demand for a specific ETF, they can issue new units by delivering a basket of assets to the ETF sponsor.   In exchange, the ETF sponsor provides the market maker with ETF units of equal value, which the market maker subsequently sells publicly on the business to meet investor demand. In the event of redemption, the process can be reversed when the supply of units exceeds demand.   The primary market is concerned with the high demand and supply of institutional or non-institutional investors who buy and sell ETF shares in bulk in tandem with the Authorized Participant.   In the primary market, investors utilize an "authorized participant" (AP) to adjust the supply of ETP shares available either to sell a large basket of shares ("redeem") or to buy a large basket of shares ("create").  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.  Source: freepik Secondary liquidity  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.   Individual investor transactions take place at market prices throughout the trading day. The determinants of the liquidity of Primary and Secondary Liquidity of ETFs are very different.   Liquidity in the primary market depends upon the value of the underlying shares that back up the ETF. While liquidity in the secondary market depends upon the weight of ETF shares traded.   When executing a large trade that runs into thousands of ETF shares, investors can circumvent an illiquid secondary market by directly engaging with the AP to create new shares in the primary market.   The liquidity of the underlying securities and the liquidity of the ETF in the primary market share a direct relationship. The more efficiently an AP can access the underlying market, the more ETF shares it can create and redeem.  Unfortunately, most retail or small-scale institutional investors rely on secondary markets for their portfolio allocation. The liquidity in the secondary market can be judged by various statistics such as average spreads, average trading volume, and premiums or discounts, i.e., the value of the ETF (is it near the NAV).  The volume of an ETF is often seen as a measure of liquidity, which is incorrect. The liquidity of an ETF is influenced by the liquidity of the underlying securities, whereas trading volume is affected by investor activity.  Suppose an ETF invests in securities with limited supply or that are difficult to trade. In that case, market makers may be unable to create or redeem units of the ETF, affecting the portfolio's liquidity FAQs What is ETF liquidity and why is it important for investors? ETF liquidity refers to the ease with which an ETF (Exchange-Traded Fund) can be bought or sold in the market without significantly impacting its price. Liquidity is crucial for investors as it ensures that they can enter or exit their ETF positions swiftly and at a fair market price. How is ETF liquidity determined? ETF liquidity is primarily determined by the trading volume and the presence of active market makers. Higher trading volume indicates greater liquidity, as it implies a larger number of buyers and sellers. Additionally, the involvement of market makers, who provide continuous bid and ask prices, enhances liquidity by facilitating smooth transactions. What are the advantages of investing in highly liquid ETFs? Investing in highly liquid ETFs offers several advantages. Firstly, it ensures ease of buying and selling, allowing investors to enter or exit positions promptly. Secondly, high liquidity reduces the bid-ask spread, resulting in lower transaction costs. Consult an expert advisor to get the right plan for you TALK TO AN EXPERT

Bond ETFs are exchange-traded funds that invest exclusively in bonds. They hold a portfolio of bonds with various strategies and holding periods.   Bond ETFs are for treasuries, corporates, convertibles, floating-rate bonds, etc. Bond ETFs are analogous to stock ETFs as they are passively managed and traded in the secondary market. ETFs have become especially prominent vehicles for entering the fixed-income segment of the market in recent years.   Emerging Market ETFs Read More Investors have gradually become more comfortable with the mix of fixed-income exposure and the exchange-traded structure, which grew far more slowly than equities ETFs at first.  Investors in bond ETFs are typically attracted to a product like the Total Bond Market ETFs, which provide exposure to the entire bond market in one shot.   Treasuries dominate many ETFs that expose the investment-grade U.S. debt market, a bias that stems from the sheer scale of the U.S. government's debt obligations.   As a result, there is a concentration within a single issuer, which may not be an ideal thing to do for investors looking to build a well-balanced long-term portfolio.   Several ETFs can augment this fixed-income exposure, providing affordable and efficient access to parts of the global bond market not included in popular bond ETFs like AGG and BND. Municipal bonds, often called Munis, are also very secure and stable bonds. Municipal bonds typically include tax-free interest payments, making them attractive to investors in higher-tax bonds.   On the other hand, these bonds can be helpful in various portfolios, potentially boosting the yields on government debt. Some ETFs specialize in multiple durations and credit quality, from low-risk pre-refunded Munis to speculative high-yield municipal debt.  Build America Bonds are a unique section of the municipal bond market that can provide investors with significant actual returns while posing a low risk of default.   The Build America Program aimed to lower borrowing costs for towns seeking to complete critical capital projects. BABs are taxable bonds issued by state and local governments, with the U.S.   The Treasury is subsidizing the interest on the bonds. BABs are appealing because of their unique structure, which provides an attractive coupon for investors.  Many of the new fixed-income ETFs launched in recent years have concentrated on bond markets outside of the United States, and a variety of broad-based and precise ETFs are available to access this asset class.  Multinational Corporate Bonds give investors access to international corporate debt products, which are a force to be reckoned with.  Emerging Market Bonds are a group of instruments that provide investors with exposure to both dollar-denominated and local currency-denominated bonds.   Those seeking greater dollar diversification will generally be better suited to investing in issues denominated in foreign currencies rather than the U.S. dollar.  By employing three simple steps, we can create a bond portfolio Determine the allocation of choice in the fixed-income ETFs.  Implement a prudent trade strategy to get maximum returns through a single purchase, SIP, or any other plan that the investor deems fit.  Monitoring and assessing the portfolio regularly.  A bond portfolio can be made using the products mentioned earlier, weighting methodologies, management type, expense ratio, duration, credit quality, yield to maturity, and even returns.  The taxability of the ETF should also be kept in mind. The ETF finder is a handy tool for such combing operations! FAQs What are bond ETFs? Bond ETFs are exchange-traded funds that exclusively invest in bonds. They hold a portfolio of bonds with various strategies and holding periods. How can bond ETFs provide exposure to the bond market? Bond ETFs offer investors exposure to different types of bonds, including treasuries, corporates, convertibles, and floating-rate bonds. They provide a convenient way to enter the fixed-income segment of the market. What are some considerations when building a bond ETFs portfolio? Investors should consider diversification by not concentrating on a single issuer. They can augment exposure by investing in ETFs that cover parts of the global bond market not included in popular bond ETFs. Municipal bonds and Build America Bonds are also options to consider for stability and attractive returns. What steps are involved in creating a bond portfolio with ETFs? The steps involve determining the desired allocation in fixed-income ETFs, implementing a trading strategy (such as single purchases or systematic investment plans), and regularly monitoring and assessing the portfolio. Factors like weighting methodologies, management type, expense ratio, duration, credit quality, yield to maturity, and taxability should also be considered. The ETF finder tool can assist in this process. Consult an expert advisor to get the right plan TALK TO AN EXPERT

We have seen how exchange-traded funds differ from mutual funds. Now let us focus on the difference between ETFs and stocks since both are tradeable on the 'stock' exchange.   In today's day and age, investors have many choices to invest in to grow their wealth. Investing in stocks, bonds, mutual funds, ETFs, etc., the list is virtually endless.   The main aim of any investor is to see his investments grow; thus, each instrument brings many advantages and disadvantages.  Retail investors like you and I can choose from stocks and ETFs. Both are available on the stock market for trading. On the one hand, a stock offers ownership in a single firm; an ETF gives you a basket of securities depending upon the type of ETF you choose.   Thus, ETFs give you access to virtually any part of the financial market. ETFs are collections of stocks, bonds, commodity derivatives, and other investments traded on an exchange.  There are several differences between stocks and ETFs, but first, look at their similarities. Both the ETFs and stocks are taxable upon redemption. Both offer a steady income.   Stocks’ dividends are credited directly to the investors' accounts after tax deductions. Similarly, the assets underlying the ETFs also generate dividends and returns, either invested back into the fund or given back to the investors after proper deductions.   You can choose both ETFs and stocks from various sectors. Similar to stocks, ETF trading can be done on the stock exchange.  What are the differences, then? ETFs are a group of securities packaged as a unit and listed on the exchange. These assets need not be only stocks but can be any security.   These ETFs are managed by professional fund managers who own the underlying securities. The investors concerned about the ETFs do not own the underlying assets directly and hence give no ownership and voting rights.   On the other hand, stocks listed on the exchange offer ownership and voting rights (if they are not preferencing shares) in a single company. Preference shares are the shares that give the investor a promised return at the cost of forgoing voting rights in the AGMs.  ETFs are managed by a professional, thus saving you the trouble of deciding which securities in the underlying assets of the ETF to sell or hold. In the case of stocks, investors need to be very vigilant in the market to know when to buy, sell, or hold.   Conversely, in the case of ETFs, investors don’t have any control over what happens to the portions of ETFs. Since ETFs have a diversified profile of assets, the risk associated with the investment reduces significantly.   Whereas in stocks, the risk attached is higher as the stock price depends entirely upon the company's performance and other external factors (outside the control of the person in question).  The liquidity of a stock is way higher than the liquidity of an Exchange Traded Fund. However, in rare cases, the latter can have higher liquidity than the former.  The bottom line is that you should make every investment by studying the risks involved. The investor should keep his risk profile in mind before proceeding.   Most importantly, the strategies and goals of the investor are vital when choosing securities. The right for one might not be the right choice for the other.   Keeping these fundamental differences and similarities in mind helps in better decision-making.  FAQs How are ETFs different from stocks? ETFs are a group of securities packaged as a unit and listed on the exchange, while stocks represent ownership in a single company. ETFs offer diversification across multiple securities, while stocks offer ownership and voting rights in a specific company. Who manages ETFs and stocks? ETFs are managed by professional fund managers who own the underlying securities, relieving investors from the need to make individual buy/sell decisions. Stocks require investors to actively monitor and make decisions regarding buying, selling, or holding shares. What is the difference in risk between ETFs and stocks? ETFs typically have a more diversified profile of assets, reducing the risk associated with the investment. Stocks, on the other hand, have a higher risk as their value depends on the performance of the specific company and external factors beyond an individual's control. Which has higher liquidity, ETFs or stocks? Generally, stocks have higher liquidity than ETFs. However, in some cases, ETFs can have higher liquidity depending on factors such as popularity and trading volume. Liquidity refers to how easily an asset can be bought or sold on the market. Consult an expert advisor to get the right plan TALK TO AN EXPERT

Before moving to what emerging market ETF is, let's quickly learn what emerging markets are, their characteristics, and why they should be acknowledged whilst making a portfolio.  Emerging markets are countries that are increasing their manufacturing capabilities. They are moving away from agriculture and raw material exports, which were once their main sources of income.  Governments in emerging countries want to improve the lives of their citizens. They are fast industrializing and transitioning to a mixed economy or free market. Brazil, China, India, Russia, etc., are some examples of emerging economies.  Characteristics of emerging economies What does this mean?  There are numerous ways to profit from emerging markets' high growth rates and prospects. The best option is to invest in a fund that focuses on emerging markets.   Many funds either track the MSCI Index or strive to outperform it. This helps save a load of effort. It is unnecessary to conduct extensive research into foreign firms and economic policies.   It also lowers risk by distributing investments across various emerging markets rather than just one.  However, emerging markets are not all equal in terms of investment potential. Since the global financial crisis of 2008, some countries have used rising commodity prices to boost their economies.   They did not put money into infrastructure. Instead, surplus funds are used to fund subsidies and new government employees. As a result, their economies grew swiftly, their citizens bought a lot of imported goods, and inflation became a problem immediately.  Brazil, Hungary, Malaysia, Russia, South Africa, Turkey, and Vietnam. Governments can encourage foreign direct investment by keeping interest rates low.  It was well worth it, even if it did assist in raising inflation. The countries received tremendous economic growth in exchange.  Emerging market funds are mutual funds or exchange-traded funds that invest in publicly traded companies based in an emerging country or region.   Funds might target specific geographic areas or invest in a single country. While an emerging market fund does not have to invest solely in developing markets, it should have most of its holdings in that sector.   The remaining holdings could be more extensive domestic holdings that make capital investments in the economy's development. As Hyundai has made significant investments in plants in India, an emerging market fund investing in India may also hold Hyundai stocks.  Emerging Markets ETFs have $330.14 billion in assets under management, with 233 ETFs trading on US exchanges. The cost-to-income ratio is 0.58 percent on average.   With $79.22 billion in assets, the Vanguard FTSE Emerging Markets ETF VWO is the largest Emerging Markets ETF. MEXX, the best-performing Emerging Markets ETF in the previous year, returned 80.89 percent.   The VanEck Digital India ETF DGIN was the most recent ETF to launch on February 15, 2022.  Top emerging market ETF issuers by AUM.  IssuerAUM in $ billionNumber of fundsBlackrock Financial Management112.4014State Street7.124Invesco1.665Charles Schwab13.892First Trust0.645 Top and Bottom performers in the category of ETFs Top ETF Performers according to etf.com  TickerFund NameTrailing 30-day price TR changeYANGDirexion Daily FTSE China Bear 3X Shares28.44%FXPProShares UltraShort FTSE China 5018.58%EDZDirexion Daily MSCI Emerging Markets Bear 3x Shares17.37%CHIEGlobal X MSCI China Energy ETF15.04%BRZUDirexion Daily MSCI Brazil Bull 2X Shares13.19% Bottom ETF Performers according to etf.com TickerFund NameTrailing 30-day price TR changeRUSLDirexion Daily Russia Bull 2X Shares-85.12%RSXVanEck Russia ETF-70.31%FLRUFranklin FTSE Russia ETF-59.40%RSXJVanEck Russia Small-Cap ETF-44.38%YINNDirexion Daily FTSE China Bull 3X Shares-24.81% Emerging markets offer investors a great way to diversify their portfolios without sacrificing growth.   While the investments are more volatile, the underlying firm frequently enjoys significant growth as the new market grows. Before investing in emerging economies, investors should do their homework. FAQs What are emerging market ETFs? Emerging market ETFs are mutual funds or exchange-traded funds that invest in publicly traded companies based in emerging countries or regions. These funds typically target specific geographic areas or invest in a single country, with most of their holdings in developing markets. Why should investors consider investing in emerging market ETFs? Investing in emerging market ETFs offers the opportunity to diversify portfolios and participate in the high growth rates of emerging economies. These ETFs distribute investments across various emerging markets, reducing the risk associated with investing in a single country. How do emerging market ETFs differ from other funds? Emerging market ETFs focus on investing in companies based in emerging economies, whereas other funds may have a broader scope. These ETFs allow investors to gain exposure to the growth potential of specific regions or countries within the emerging market sector. What are some top-performing and bottom-performing emerging market ETFs? According to etf.com, some top-performing emerging market ETFs include YANG, FXP, EDZ, CHIE, and BRZU, with notable price increases over a trailing 30-day period. Conversely, some bottom-performing ETFs in this category include RUSL, RSX, FLRU, RSXJ, and YINN, with notable price decreases over the same period. Note: The specific performance of ETFs may vary, and investors should conduct thorough research before making investment decisions in emerging market ETFs. Consult an expert advisor to get the right plan TALK TO AN EXPERT

Earlier we read about top 3 cheapest ETFs in terms of expense ratio. In this article, we will read related to the top three costliest ETFs in terms of expense ratio. Exchange Traded funds and mutual funds are two of the most successful long-term investment vehicles. You may even have some of it in your pension fund.   However, you may not have the awareness that a portion of your portfolio is allocated to a charge termed an expense ratio each year. It's critical to understand the costs you're paying no matter what you're investing in.  And, given the prevalence of mutual funds and exchange-traded funds (ETFs), many of us spend an annual expense ratio out of our portfolios. You will learn about expense ratio and why is it essential, and how to spot a good one when you see one. What is an expense ratio and what does it mean?  The expense ratio is the fees that a mutual or exchange-traded fund charges an investor. This charge covers the costs of management, asset allocation, marketing, and other services.   The calculation of the expense ratio is done on an investor's annual expenditure. ETF expense rates are usually less than 1%. That means you spend less than $1 per year on expenses for every $100 you invest.  However, not all ETFs are this cheap to own; some ETFs have an expense ratio that might go into double digits.  Let us look at the three most expensive ETFs in terms of their expense ratio Rank ETF SymbolExpense Ratio1 VanEck BDC Income ETFBIZD10.07%2 Virtus Private Credit Strategy ETFVPC6.46%3 AdvisorShares Ranger Equity Bear ETFHDGE5.20% Let's have a look at these ETFs one by one.   1. VanEck BDC Income ETF  BIZD is a focused index of publicly traded private-equity companies in the United States: The ETF invests in the equity and debt of mid-sized private companies by purchasing shares of companies that invest in them.  To ensure diversification, the index selects the most significant and most liquid companies, considered Business Development Companies (BDCs), and weights them by market capitalization, with a cap of 20% per issuer.  Small and midcap stocks can be in the index too. The fund employs a sampling technique, which means it will not own all of the equities in the underlying index but will instead hold securities with similar investment profiles.   The index is re-evaluated every three months. Performance  Performance [as of 18/03/22]1 year3 years5 years10 yearsBIZD15.80%13.11%8.30%- The fund invests entirely in the United States Top 10 holdings Source: etf.com BIZD details BrandVanEckExpense Ratio10.07%YTD Return1.86%AUM$669.71MNumber of Holdings25Avg. Spread ($)$0.02Average Daily $ Volume$6.08M 2. Virtus Private Credit Strategy ETF  VPC is a fund that invests in US-listed closed-end funds to make money from private credit markets (CEFs). CEFs supervised as business development companies (BDCs) and non-BDC CEFs that concentrate on personal loans are the two primary types.   The BDCs use a variety of loan and equity structures to engage in middle-market companies with below-investment-grade ratings. Loans, CLOs, and senior loans are among the investments made by non-BDC CEFs.   The VPC index looks for consistent dividend payments over the last three years. Non-BDC CEFs are even further vetted to eliminate excessive price premiums or discounts compared to NAV. The dividend yield is the weight of the security.  Because the fund is a fund-of-fund, investors must anticipate spending twice as much due to cost compounding. The benchmark is rejigged every year and rebalanced every three months.   Performance  Performance [as of 18/03/22]1 month3 months1 year3 yearsVPC-2.87%-3.49%6.96%6.17% Peer Comparison ParameterVPCHNDLBrandVanEckStrategy SharesExpense Ratio6.46%0.97%YTD Return-0.72%-7.65%AUM$29.69M$1.61BNumber of Holdings5920Avg. Spread ($)$0.09$0.02Average Daily $ Volume$336.24K$20.79M 3. AdvisorShares Ranger Equity Bear ETF  HDGE builds a portfolio of short positions in large and midcap US-listed equities using a blend of quantitative and fundamental considerations.  This actively managed fund employs a bottom-up strategy to identify companies with poor earnings quality or ambitious accounting techniques and profit when market prices change to reflect the reality of these aberrations.   However, it is to be noted that a protracted bull market is a challenging environment for a short-only approach, and returns may reflect this. The fund's strategy also includes immediate purchases and sales of securities, which could result in a higher portfolio turnover and, as a result, lower returns.   Overall, HDGE has a solid asset base and can act as a substitute for traditional inverse equity funds.  Performance  Performance [as of 18/03/22]1 year3 years5 years10 yearsHDGE-0.85%-27.36%-21.58%-18.53% Peer Comparison  ParameterHDGESOGUBrandAdvisorSharesDe-SPACExpense Ratio5.20%0.95%YTD Return0.94%25.83%AUM$91.24M$24.79MNumber of Holdings50Avg. Spread ($)$0.05$0.20Average Daily $ Volume$4.01M$1.95M FAQs What are the top 3 costliest ETFs to invest in? The 3 costliest ETFs to invest in are AdvisorShares Ranger Equity Bear ETF, Virtus Private Credit Strategy ETF, and VanEck BDC Income ETF. What's the AUM of the current largest ETF? The AUM of the current largest ETF, SPDR S&P 500 ETF Trust, is $361 million. What are the hottest ETFs to buy in 2023? Some of the ETFs that investors can go for in 2023 are Energy Select Sector SPDR Fund (XLE), VanEck Future of Food ETF (YUMY), Vanguard Utilities Index Fund ETF (VPU), Invesco QQQ Trust Series 1 (QQQ), Schwab US Dividend Equity ETF (SCHD), etc.

Earlier we read about the top three ETFs in the small-cap category. In this article, we will look into the top three ETFs in the mega-cap category. However, before that, let's understand what mega-cap is. What exactly is Mega-Cap?  As measured by market capitalization, the largest corporations in the financial universe are mega-cap.   Mega-cap firms have a market capitalization of more than $200 billion, and the exact criteria vary depending on market conditions. Apple (AAPL), Amazon (AMZN), and Meta (FB), previously Facebook, are just a few of the companies that have significant brand awareness and operate in large regions around the world.  Overview of Mega Cap Mega-cap stocks often hold a substantial impact in various industry sectors due to the sheer size and volume of sales of goods and services in a given period.   For example, Apple has a market worth over $2 trillion due to continuing iPhone sales strength. Amazon has reached new highs thanks to the success of its retail operations and web services, and Facebook has renamed itself, Meta, to reflect its future focus.   Currently, there are roughly a dozen businesses listed on the New York Stock Exchange with market capitalizations exceeding $300 billion, most of which are in the technology industry.  The top three ETFs in the mega-cap category  Rank ETF1 iShares Global 100 ETF 2 Vanguard Mega Cap Growth ETF 3 iShares Russell Top 200 ETF  1. iShares Global 100 ETF  Overview  IOO's parent index, the S&P Global 1200, aims to provide market-cap-weighted coverage to 100 of the world's largest multinational companies. It lands firmly in the mega-cap rather than the large-cap area.   The fund completely avoids midcaps. It has some sector and geographic tilts due to its focus on mega-caps and the avoidance of emerging economies outside Korea.   The index tracks the performance of significant blue-chip corporations with international exposure. Companies must receive a substantial amount of their revenue and holdings from many countries to be deemed global.   The rejigging of the index is done every three months, beginning in March. The MSCI ESG Fund Rating of AAA for the iShares Global 100 ETF is 8.60 out of 10.   The MSCI ESG Fund Rating assesses a portfolio's long-term resistance to risks and opportunities posed by environmental, social, and governance variables.  Performance  Performance [as of 03/02/22]1 year3 years5 years10 yearsIOO15.18%18.53%15.06%11.64%S&P Global 100 Index15.46%18.50%14.95%11.52% IOO Top 10 Countries exposure   IOO Top 10 Holdings  IOO details  BrandiSharesExpense Ratio0.40%YTD Return-5.52%AUM$3.61BNumber of Holdings104Avg. Spread ($)$0.07Average Daily $ Volume$18.12M 2. Vanguard Mega Cap Growth ETF  Overview  MGK targets the biggest growth businesses in the United States. It looks for companies with six growth characteristics: future long-term EPS growth, future short-term EPS growth, three-year historical EPS growth, three-year historical sales per share growth, current investment-to-assets ratio, and return on assets.   Combining all these six growth variables is used to score and rank securities. MGK delivers market-like exposure by having the same capitalization size split as its index and similar sector weighting.  MGK, like all Vanguard ETFs, only publishes its holdings once a month. The MSCI ESG Fund Rating for Vanguard Mega Cap Growth ETF is AA, based on 8.19 out of 10.  Performance  Performance [as of 03/02/22]1 year3 years5 years10 yearsMGK10.51%23.76%19.86%16.85% The fund invests entirely in the USA.  Top 10 holdings MGK MGK details  BrandVanguardExpense Ratio0.07%YTD Return-13.51%AUM$11.93BNumber of Holdings111Avg. Spread ($)$0.07Average Daily $ Volume$105.49M 3. iShares Russell Top 200 ETF  Overview  IWL provides a broad range of large-cap exposure. This simple fund invests in the top 200 US companies in the Russell 3000 Index, weighted by market capitalization.   The fund's portfolio has adequate allocations to household brands, representing around 68% of the US equities market. IWL is notable for having a somewhat skewed exposure at the top, as its focus on the top 200 stocks excludes large caps from the bottom.   Fund employs a representative sampling indexing approach rather than copying the index. Every year, the index is recreated and rebalanced. The MSCI ESG Fund Rating for the iShares Russell Top 200 ETF is AA, with a score of 7.78 out of 10  Performance Performance [as of 03/02/22]1 year3 years5 years10 yearsIWL14.57%19.17%15.88%14.98%Russell Top 20014.81%19.33%16.09%15.16% The fund invests entirely in the USA. Top 10 holdings IWL IWL details  BrandiSharesExpense Ratio0.15%YTD Return-8.05%AUM$959.11BNumber of Holdings201Avg. Spread ($)$0.05Average Daily $ Volume$14.09M One should look out at these ETFs before investing in the mega-cap category in the USA. FAQs What's the market value of the Mega-Cap category? The market value of companies under the Mega Cap category should be $200 billion or more. What are some examples of Mega-Cap companies? Some publically-funded companies with a market capitalization of $200 billion or more under the Mega-Cap category are Microsoft, Alphabet, Meta, Apple, Amazon, Nvidia, etc. Why should one invest in Mega-Cap stocks? Mega-cap stocks often offer stability, a proven track record, protection against market downturns, and potential dividend payouts. Consult an expert to get the right plan for you TALK TO AN EXPERT

The blockchain is a digital ledger in which transactions are recorded and stored in linked data blocks, providing a secure and unalterable record of transactions.  Blockchain technology powers cryptocurrencies, which proponents argue have far more potential than just backing digital money. Blockchain ETFs aim to give investors exposure to companies that make money from blockchain or create and explore the technology. Blockchain technology is in the budding stage. Companies in this area, on the other hand, are well established. IBM, Amazon.com, and SAP are just a few examples.   Companies who want to gamble and engage in this technology want to buy regulated company stocks. ETFs, or Exchange Traded Funds, invest in companies that operate in the blockchain space.  What are Blockchain Exchange Traded Funds (ETF)?  An ETF is an investment product based on a valuable underlying asset. For example, a blockchain ETF invests in blockchain assets such as equities of blockchain firms, virtual currencies, and crypto trading activity, to mention a few.   On the other hand, a blockchain ETF does not have to invest in companies that deal with cryptocurrencies like Bitcoin.  When someone invests in an ETF, they are investing in the assets – which means, based on investment value in the fund, they possess the right to profit from the underlying assets.   While the legality of blockchain ETFs is apparent, certain regulators continue to prohibit Bitcoin and crypto ETFs due to liquidity and valuation issues. Bitcoin ETFs are more volatile than blockchain ETFs.  How do Blockchain ETFs work?  Aside from profit from advancements in blockchain technology, there are several advantages to investing in ETFs.  For example, the BLCN ETF tracks the Reality Shares Nasdaq Blockchain Economy Index. The index comprises equities from firms involved in blockchain technology research, development, support, and use, as well as related businesses.  When a company is studied for inclusion in the index, its stock is given a "Blockchain Score" based on several factors, including how the company contributes to the blockchain ecosystem, its blockchain products, economic impact, research and development expenditures, and its results and innovations.  The index includes all of the top 50 to top 100 firms with strong ranking scores. Every six months, rebalancing takes place and calculates new blockchain scores.  Finally, the ETF uses the benchmark to analyze the returns of each of the equities in the index and the company's overall "contribution" to the blockchain economy. The goal is to track the value of the blockchain economy and its growth, as indicated by the index's top-performing enterprises.  Blockchain ETFs have $1.42 billion in assets under management and trades are made on the New York Stock Exchange. On average, the expense ratio is 0.64%.  With $950.22 million in assets, the Amplify Transformational Data Sharing ETF BLOK is the largest Blockchain ETF. The best-performing Blockchain ETF in the previous year was LEGR, which returned 0.27 percent.   The Defiance Digital Revolution ETF NFTZ, established on 12/01/21, was the most recent ETF in the Blockchain field.  ETFAUMDescriptionAmplify Transformational Data Sharing ETF (NYSEMKT: BLOK)$1.06 billionThe largest blockchain ETF by net assets.Siren Nasdaq NexGen Economy ETF (NASDAQ: BLCN)$244 millionThis ETF is focused on tracking the Nasdaq Blockchain Economy Index.First Trust Indxx Innovative Transaction & Process ETF (NASDAQ: LEGR)$152 millionThis ETF has a portfolio of more than 100 stocks with exposure to blockchain technology.Bitwise Crypto Industry Innovators ETF (NYSEMKT: BITQ)$111 millionLaunched in 2021, this is a focused portfolio of crypto and Bitcoin (CRYPTO: BTC) stocks.Global X Blockchain ETF (NASDAQ: BKCH)$102 millionAnother newcomer in the blockchain ETF space. 1. Amplify Transformational Data Sharing ETF Holds 47 securities from throughout the world, with roughly three-quarters of them based in North America and the rest in Asia and Europe.  2. Siren Nasdaq NexGen Economic ETF Comprises 64 stocks, focuses on technology companies, and has less exposure to cryptocurrency-holding corporations than other similar ETFs. This ETF features a nearly 50/50 split of domestic and overseas companies.  3. First Trust Index Innovative Transaction & Process ETF The most diverse blockchain and crypto ETF with 103 stocks. A bit more than a third of its portfolio comprises companies situated in the United States.  China is the second-largest region represented, with the rest coming from Europe and Asia. 4. Bitwise Crypto Industry Innovators ETF Consists of 30 different stocks. In a significant way, the Bitwise Crypto Industry Innovators ETF varies from the other funds.   The portfolio's equities are a more focused bet on the crypto industry, with many of them being Bitcoin miners and other businesses that are accumulating the top cryptocurrency.  Bitwise Crypto Industry Innovators ETF has generally tracked the price of Bitcoin since its inception, owing to its bias toward companies that own Bitcoin and other crypto pure-plays.  5. Global X Blockchain ETF The list's newest, most minor (in terms of AUM), and most recent. The ETF consists of only 25 equities.   Although there are a few IT companies in the portfolio, such as Coinbase, Nvidia, and PayPal, most of the holdings are crypto mining companies. FAQs What are some top-performing blockchain ETFs? Some top-performing blockchain ETFs include BLCN, LEGR, BLOK, etc. How do I invest in blockchain? There is no method to directly invest in blockchains, as of January 2022. However, an investor can invest in companies and technologies developing services and products that use blockchain. How many blockchain ETFs are there? There are 11 blockchain ETFs in the US market with a total AUM of $714.85M. Consult our expert advisor to get the right plan TALK TO AN EXPERT

Active ETFs and Passive ETFs the words actively and passively convey a meaning that has a positive and a negative connotation. However, in the parlance of ETFs, it is not the case. In the point of ETFs, sometimes being passive rather than active can help. In this article, let’s try to understand what they stand for and how one stands against the other, or are they just different investment strategies?  What are Passively Managed ETFs?  Passively managed ETFs are the ETFs that directly replicate the underlying index. The investment strategies of the ETF are governed by the underlying index and not the conscience of the fund manager. Let’s understand with an example, the Vanguard S&P 500 ETF (VOO) is a passive ETF that tracks the S&P 500. The ETF has 507 shares in it, and the index has 505. The standard deviation is 17.42% and 17.41%, respectively, thus, showing shows how closely the ETF tracks the index.   Passive investment means moving along the market, i.e., owning it rather than outpacing it. Owning the market means having a portion of all the underlying index shares and mimicking its growth rather than running ahead. Conservative passive investors feel that consistently beating the market is impossible or, at best, extremely implausible.   Passive funds are cheaper to own and administer, and this lowers the expense ratio of the ETF. In our above example, the Vanguard ETF has a meager expense ratio of 0.03%. Most passive investors believe that these funds outperform the actively managed funds in the long run due to lower costs, and not all can be above average.  However, not everything is excellent; passive investing comes with problems and criticisms. Passive ETFs are subject to market risks and lack flexibility. The fund managers are helpless if the index goes against the ETF strategy, and they cannot alter the underlying assets to cushion such volatility.   One of the most significant drawbacks of these ETFs is that they track capitalization-based indices. The larger the market capitalization of a stock, the higher its weight in the index and consequently in the ETF. This reduces the diversification of the ETFs and makes the ETF returns susceptible to the performance of such large-cap firms.  What are Actively managed ETFs?  An actively managed ETF is a type of exchange-traded fund. A manager (or a team) chooses the underlying portfolio allocation rather than an index or a rule. Active ETFs generally try to outperform a specific benchmark or a sector. The managers are free to select any strategy to deliver the promised gains to the investors.   The ETF has an underlying benchmark index, but the manager can alter the allocation of the securities as the manager sees fit – thereby generating a return that does not mimic the index.  Let’s understand with the help of an example. The SPDR SSGA Global Allocation ETF (GAL) has an allocation in various stocks, bonds, and ETFs spanning several sectors of the economy and the globe. The ETF also has exposure to corporate bonds, emerging markets, and small-cap stocks.  An actively managed ETF allows the investor to course-correct during market volatility and provides a pioneering solution to asset management.   Such strategies are also common in mutual funds, but they become an attractive option since ETFs have lower costs than mutual funds. The GAL ETF has an expanse ratio of just 0.35%.  However, the actively managed ETFs also have several drawbacks. Active ETF fund managers have the option to trade outside of a benchmark index, making it more difficult for investors to predict the composition of their future portfolios. Such ETFs have a higher expense ratio than the traditional passive ETFs.   In our examples, the expense ratio of both these ETFs differed by almost 0.32%. The pressure to beat the market might hamper asset allocation, and the ETF might underperform the actual index. Most fund managers adjust budgets based on market conditions; the fund may become less diversified than a passive ETF.  Actively managed ETFs and passively managed ETFs is an effective and popular investment techniques for ETF investors.

ETFs have been doing the rounds in the market for a long time and have penetrated deeply into investor portfolios. Thanks to their liquidity, accuracy, and ease of understanding, these instruments have proven to be a boon for retail and institutional investors. Advantages of ETFs The most eye-catching amongst them is their lower costs. But why are these ETFs cheaper? The answer to this question is the ETF structure and how they operate. Reasons why ETFs are cheaper?  Most ETFs are passive index funds. These funds generally track the underlying index with full or partial replication, thereby reducing the need for actively managing a fund which is usually the case with mutual funds.  Index-tracking mutual funds are also expensive as compared to similar ETFs. Let's suppose an investor wants to sell or buy an ETF; the investor does the same by directly placing an order with the broker. However, to transact in a mutual fund, the investor needs to contact the fund manager, sell these units in the secondary market, and revert to a tedious process that costs more. The mantra is simple "less work = fewer costs" ETFs use an "in-kind" method of creation and redemption of shares. What is the in-kind creation process?  An in-kind creation process means that if an investor has a portfolio precisely similar to the underlying security basket of the ETF, then the investor can directly exchange this portfolio for the equivalent number of ETF shares.  The option was available only to large sum investors or institutional investors, but now it is available for retail investors too. This type of transaction reduces the number of transactions an investor must go through to get ETF shares. Thus, the transaction fee and paperwork commission are not there. What is the in-kind redemption process? An in-kind method of redemption process is also in place. The investor can opt for an in-kind redemption process by exchanging the ETF share for underlying securities rather than selling them in the secondary market.  The above-mentioned process again enables the fund to buy and sell securities without entering the secondary market, leading to a reduction in paperwork and other transaction costs, thus allowing a cost-effective running of the fund. Consumers, thus, benefit in the form of a lower expense ratio. Administration charges are also one of the key factors which increase the cost of holding mutual funds vis-à-vis ETFs.   Since ETFs trade on the stock exchange. The fund house need not get involved in the everyday transactions of the fund. The issuer needs to come into the picture only during the creation and redemption process of the shares.   Consider this: When investors trade Tesla (TSLA) shares, the company has no direct involvement. ETF issuers have no direct participation when investors sell their shares on similar lines.   On the other hand, a mutual fund needs to be involved in every transaction since all transactions happen through him.  Mutual funds charge an annual 12b-1 fee. What is a 12b-1 fee? It is an expense that the mutual fund undertakes to promote and market the mutual fund to increase its AUM.   If you wonder whether they transfer these expenses to their investors, the answer is - YES, they transfer these expenses! The world is not a fair place after all.  According to the Securities and Exchange Commission (SEC), "these fees are deducted from a mutual fund to compensate securities professionals for sales efforts and services provided to the fund's investors."   The original motive for sharing these costs was to increase the popularity of the mutual funds by lowering the expenses of mutual fund houses, but in today's world, where they have infiltrated almost every portfolio, charging this fee is a bit controversial.   ETFs are far less expensive than mutual funds because they do not charge 12b-1 fees, thus, they have a lower expense ratio. Conclusion ETFs are significantly cheaper than other such investment vehicles due to their operation and structure.   ETFs are intrinsically more cost-effective than mutual funds since they trade on exchanges like stocks, eliminating many operational fees of running a mutual fund.   Furthermore, because most ETFs are passively managed and linked to an index, issuers have fewer costs to pass on to investors, resulting in reduced expense ratios. Consult an expert advisor to get the right plan TALK TO AN EXPERT FAQs Is it better to buy ETFs than mutual funds? Which option is better - ETFs or Mutual Funds - the answer to this question varies from investor to investor. However, if you are looking for an investment that is more tax-efficient, ETFs would be a better option for you. Are there any disadvantages to owning ETFs? There are two sides to every coin. Just like its tremendous advantages, there are some drawbacks that investors must be aware of before buying ETFs. Some of the disadvantages include high trading fees, low trading volume, operating expenses, tracking errors, etc. Should I switch from mutual fund to ETF? Switching from mutual funds to ETFs would likely be the right choice for you if the fund you're investing in has a high expense ratio or, due to undesired distribution of capital gains, you find yourself paying too much in taxes every year.

Diversification is an essential component of life; the same is true with financial instruments! Typically, there are thousands of Exchange Traded Funds(ETFs) in the market to invest in, which have several hundred types of underlying assets that the fund mimics.  These ETFs can be used to grow wealth, counter adverse speculations, offset inflation risks, or maybe hedge your portfolio. Types of ETFs 1. Bond ETFs  Bond ETFs are also called Fixed Income ETFs. The reason for the name is that the ETF invests the money in various fixed-income instruments like government bonds, corporate bonds, etc.  These securities have a fixed percentage return over time and have very high stability. Hence several professionals invest in such ETFs to have a steady flow of unhindered income. People often use such funds to hedge the volatile parts of their portfolios.  For instance, iShares Core U.S. Aggregate Bond ETF, Vanguard Total Bond Market ETF, Bharat Bond ETF, etc., are some ETFs that invest your money into fixed-income instruments.  2. Equity ETFs  Equity Exchange Traded Funds generally track indices in the equity sector of the financial market. These ETFs track several sectors or industries and try to replicate their growth in the fund's performance.   One can choose ETFs covering large businesses or small businesses, etc. For instance, if an ETF covers the banking sector, it will hold stocks of firms working in the banking sector. Thus, it will help the fund mimic the growth path of the banking sector.   Now, the fund doesn't need to have only the firms from a single country; stocks from around the globe can also be underlying securities in an ETF. Composition depends on what ETF you choose. Unlike holding actual stocks, such ETFs do not involve actual ownership of securities.   Examples of such ETFs are ICICI Prudential NIFTY ETF and SBI ETF, listed on the Indian markets. In the USA, SPDR S&P 500 ETF Trust and SPDR Dow Jones Industrial Average ETF Trust are traded. 3. Commodity ETFs  Commodities are often very pricey compared to stocks and thus are often inaccessible to the commoners. What's the solution? - Owning a commodity ETF! Such ETFs are a great way to get hold of commodities like gold, silver, and other commodity derivatives like Crude Oil, Natural gas, etc.   Commodity ETFs have a lot of advantages in this particular section of the financial market. ETFs make the commodity accessible at meager costs rather than owning the derivatives or commodities.   They may also combine several products into one to hedge for any unforeseen downturns. Invesco D.B. Commodity Index Tracking Fund, KraneShares Global Carbon Strategy ETF, Axis Gold Fund, etc., are a few examples of commodity ETFs.  4. Currency ETFs  Currency ETFs generally track the movement of either a single currency or a basket of currencies bundled together. The ETFs can either hold the underlying cash directly or could use currency derivatives instead.   An investor generally buys such an ETF when he knows that the currency will appreciate or wants to hedge his portfolio against volatility. More often than not, some ETFs that hold overseas assets do hedge for currency fluctuations.   Wisdom Tree Indian Rupee Strategy Fund, Invesco D.B. U.S. Dollar Index Bullish Fund, ProShares UltraShort Yen, etc., are a few examples of currency ETFs. 5. Factor ETFs  The power of capturing the factors is often called smart beta. Factor investments revolve around targeting a specific factor return across several asset classes. Institutional investors and fund managers have been using elements to manage portfolios for ages.    ETFs have helped to transform how investors access these historically rewarded tactics. Now, these ETFs can target a single factor or multiple factors depending upon the strategy of each ETF.    A few examples of factor ETFs are JPMorgan U.S. Value Factor ETF and iShares Edge MSCI World Multifactor UCITS ETF. 6. Speciality ETFs  These ETFs need specific ETFs and several different types of specialty ETFs have been floating in the market recently. Most prominent among those are inverse funds, Leveraged funds, sustainability funds, etc. Such types of ETFs are generally risky.   Inverse ETFs usually go up when the underlying index goes down, similar to short selling by investors. Some examples of inverse ETFs are ProShares UltraPro Short QQQ and AdvisorShares Ranger Equity Bear ETF.  On the other hand, Leverage funds borrow money for each penny or a quantum of the amount invested in growing your return. For example, 2X ETF will borrow an extra $1 for every $1 you put into the fund.   Direxion Daily CSI 300 China A Share Bear 1X Shares, Direxion Daily S&P Oil & Gas Exp. & Prod. Bear 2X Shares are a few examples of leveraged ETFs. We will learn more about these ETFs in the coming time.  Which ETF to invest in all depends on the investor. Investment goals and risk appetite are the main drivers of choice. An investor needs to recognize the risk-return ratio of every ETF available in the offing. FAQs What are some good equity ETFs to invest in? Some of the ETFs, according to Morningstar's U.S., are - Dimensional US Core Equity 2 ETF DFAC, Dimensional US Core Equity Market ETF DFAU, iShares Core S&P 500 ETF IVV, etc. Which one is better to buy - a bond or a bond ETF? Both investment options have their pros and cons depending on the investor. However, you can opt for bond mutual funds if you're looking for active management, as they offer more choices. If you are planning to frequently buy and sell, then bond ETFs would be a better choice. Which ETF offers the best returns? Here are some top ETFs offering good returns - Vanguard Growth ETF (VUG), iShares Morningstar Mid-Cap Growth ETF (IMCG), Vanguard S&P Small-Cap 600 Growth ETF (VIOG), etc.

Potomac Funds, a mutual fund provider, was created by Direxion in 1997. The name came from the Potomac River, close to the company's first location in Alexandria, Virginia.   Potomac Funds was the second company to offer an inverse mutual fund in November 1997, after Rydex Investments did so in 1994. In 2006, the corporation adopted the Direxion moniker.   The use of the word "X" in the new name was to call attention to the company's leveraged index products. The business was the first to offer 3X leveraged ETFs in November 2008.  The company has Assets Under Management of approximately $ 30.8 billion as of 31 December 2021. Direxion provides investors with products like ETFs and mutual funds.   The company provides strategic and thematic ETFs and advanced ETFs like leveraged ETFs and inverse ETFs. Direxion offers non-traditional investments to accommodate various market cycles.  For financial advisors, individual investors, institutions, and active traders, Direxion specializes in providing solutions that deliver  A means of seeking broader diversification dampened volatility and income or excess returns  Efficient access to non-correlated asset classes and strategies  Flexibility to position portfolios opportunistically for near- and long-term market trends  Liquid, cost-effective access to sophisticated strategies Strategic and thematic ETFs help buy-and-hold investors achieve long-term outperformance when compared to passive indexes while seeking more specific objectives such as:  Higher-income  Enhanced diversification  Reduced volatility  Excess returns and more   Strategic funds provided by the company are in the form of the following: Fund NameTickerUnderlying indexExpense ratioDirexion Auspice Broad Commodity Strategy ETFCOMAuspice Broad Commodity ER Index0.70Direxion NASDAQ-100 Equal-Weighted Index SharesQQQENASDAQ-1000.35Direxion Russell 1000® Value Over Growth ETFRWVGRussell 10000.63Direxion Low Priced Stock ETFLOPXSolactive Two Bucks Index0.50 Thematic funds provided by the company are in the form of Fund NameTickerUnderlying indexExpense ratioDirexion Hydrogen ETFHJENIndxx Hydrogen Economy Index0.45Direxion Moonshot Innovators ETFMOONS&P Kensho Moonshots Index0.65Direxion Work From Home ETFWFHSolactive Remote Work Index0.45Direxion mRNA ETFMSGRMessenger RNA Technology Index 0.65 Leveraged and Inverse ETFs provide opportunities for investors to:  Magnify short-term perspectives with daily 3X and 2X leverage  Utilize bull and bear funds for both sides of the trade.  Trade through rapidly changing markets  Direxion leveraged ETFs have provided investors with several options based on investor tastes and preferences.   The firm provides Daily Bull and Bear 3X ETFs   These ETFs provide a daily 3X leverage to whatever the investor invests to boost the returns.   These ETFs include sectoral ETFs, which may focus on aerospace, Internet, Financials, etc. The company also offers fixed-income ETFs with a 3X leverage which may follow the bull or the bear trend.  Market Cap-based ETFs are also on offer, which may track large, mid, and small-cap stocks on the exchange. A leverage-based approach is also available in this arena.   Worldwide exposure can be achieved by investing in various ETFs which invest in emerging markets like China and Mexico. The firm also offers a variety of MSCI-based ETFs.   A 1X and 2X leveraged ETF choice is also available.   Some examples of such funds are  Aerospace & Defense Bull 3X Shares,   Financial Bear 3X Shares,   20+ Year Treasury Bull 3X Shares,   Small-Cap Bear 3X Shares,   MSCI Mexico Bull 3X Shares,   5G Communications Bull 2X Shares,   CSI 300 China A Share Bear 1X Shares.  Along with ETFs, Direxion also provides mutual funds to investors. These are either actively managed or passively managed.   Examples of some mutual funds offered by the company  Hilton Tactical Income Fund, Monthly 7-10 Year Treasury Bear 2X Fund, Monthly NASDAQ-100 Bull 1.25X Fund, etc., are According to the company, 'Our role is to complement your core investment strategies, not replace them. Our funds allow you to seek opportunities in all market conditions, offering new solutions to challenge old standards. At Direxion, we are focused on your success.   We continuously strive to provide you with innovative products, consistent performance, and on-the-ground support to help you take advantage of opportunities, execute your strategies, deliver for your clients, and grow your business—regardless of market conditions.'   Thus, Direxion leveraged ETFs need to be taken care of while investing in the ETF world or even the mutual fund world. FAQs What is Direxion ETFs? Potomac Funds, a mutual fund provider, was created by Direxion in 1997. The name came from the Potomac River, close to the company's first location in Alexandria, Virginia.   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. Is an ETF better than a stock? Investing in an ETF is less risky than investing in a stock, as ETFs are diversified. In the case of ETFs, investors do not control what happens to the portions of the ETFs. ETFs have a diversified profile of assets, and the risk associated with the investment reduces significantly. In stocks, the risk attached is higher as the stock price depends entirely upon the company’s performance and other exogenous factors of the world.    Consult an expert advisor to discuss the right plan for you TALK TO AN EXPERT

The Indian stock market offers plenty but if you’re looking for geographical diversification in your portfolio, you might want to look beyond it. The United States is the biggest market in the world and a great attraction for investors the world over. Investing in the US market means an opportunity to invest in the biggest companies in the world, and that includes the likes of Google, Facebook, Amazon, Apple, and more.  Now when something has so many great things to offer, why doesn’t everyone invest in the US? The truth is that investing in the US is much easier now than it ever was, but there are some misconceptions among Indians that hinder this route. The biggest of them are the worries of taxation upon the returns.  Let’s dive deeper into how taxation works when Indian citizens invest in the US stock market, either through stocks or exchange-traded funds.  Tax implications for investors  There are just two types of taxes levied on investors in this arena - capital gains tax and tax on dividends. Let’s understand both these taxes.  1. Capital Gains Tax  This is the tax paid on the appreciation of your asset over a period of time. Let’s say you bought a stock for 100$ and sold it after some time for 150$, capital gains tax is levied on the appreciation of 50$ on the stock.An Indian Investor does not have to pay any capital appreciation tax in the US. The taxes on this are levied in India, depending on whether it is long-term capital gains or short-term capital gains. a) Long Term Capital Gains (LTCG) If you have held an asset such as a stock or ETF for 24 months or more before selling it, you have to pay 20% as long-term capital gains tax, along with other applicable surcharges and fees.  b) Short Term Capital Gains (STCG) If you have sold a financial asset in less than 24 months for a profit, you add these gains to your income and pay taxes based on your income tax slabs. The important thing to remember is 24 months is the duration that separates long-term and short-term capital gains.  2. Tax on dividends  Dividends are another way that investors make money. The taxation on dividends, when you invest in the US, is fairly simple. The tax on dividends for Indian investors in the US is 25%, which is lower than the tax rate for US citizens. This is due to a treaty signed by India and the US to encourage investments from India to the US and vice versa.Let’s understand this with an example. If you have received $ 1000 as dividends from an investment in the US, the amount you receive after the tax deduction is $ 750. Now what gets most investors worried is if they have to pay taxes again in India on the 750$. The good news is that you don’t.India and the US have signed a DTAA (Double Tax Avoidance Agreement) which ensures that you are not paying double taxes. So, the tax you’d have to pay in India is not on the $ 750 you received after deductions but the $ 1000 you received as dividends, and the $ 250 that you’ve already paid as tax is accounted as tax paid on the amount. You only have to pay more if your tax slab exceeds 25%.  Invest in the US stock market with EduFund  You can now just download the EduFund app and create an account to start investing in the US. The account opening process is simple and the charges are zero you can get started with FAANG in your portfolio and have it geographically diversified! Invest in US Stocks