EduFund Blogs

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

As a parent, it is essential to consider the benefits of providing your child a high-quality education. Enrolling your child in a distinguished university increases the returns on their schooling and distinguishes their career.   At the same time, choosing an institute that aligns with your child’s profile is a task of utmost importance. Some would even call it the make-or-break decision.   A review by Matthew Mayhew and his co-authors of 1800 research studies reflects on how the selected college could affect your child in various ways economically, socially, psychologically, and intellectually.   In a world of IIMs and IITs, it would be wise to know: If these are suitable options for your child Are these your only options?   To ensure that your child is part of an academic environment that nurtures their unique faculties, take note of the following.  Top-ranked colleges are not necessarily the best-fit college  There is a widely-held misconception that top-ranked colleges are the absolute best. While there is merit in these famous universities being labeled as great institutions; the rank may not be the best metric of “fit.”   Popular websites that rank colleges have a set of parameters that they consider while ranking them from top to bottom. The criteria considered can vary from website to website, and these are not specific to the individual preferences of each student and, therefore, can be highly generalized.   Brand value is another main factor that plays a significant role in deciding between different universities for parents and students. The brand value varies from region to region.   It depends on the portrayal of a college to a specific audience. Having alumni from a particular university in a social circle can also influence the decision to pick a university for many parents and students. So, parents and students may choose which is the best university rather than the best-fit university for them. Source: Pexels What is the best-fit college?   The best-fit college for one student is hardly ever the best-fit college for another, even if the course of study is ordinary for them both. Two top colleges that offer the same principle can be completely different choices for these students.   While one college could provide a great deal of work experience while studying, the other can be a traditional college that entirely focuses on academics.   It is significant for every student and parent to understand which environment will work best in the future. Thus, a parent can choose the best-fit college for their child only after they know what their child expects from a college, especially as a contribution to their future career.     What to consider while choosing the best-fit college?   Before shortlisting options, parents and students need to discuss what they’re expecting out of a university. If flexibility in courses is a choice for the students in, then the UK may not be the best place.   Most UK colleges demand students choose the course they want to study before admission and continue to learn the subject throughout their period in college. However, many colleges in the US offer students more flexibility when choosing their courses.   Students should also account for the teaching methodology of colleges. Some colleges offer one on one attention to students and demand they work on each chapter after a few lectures and discuss it with their tutors weekly or regularly.   Such colleges may work for students who like to be regularly taken care of. However, if a student prefers to attend large lectures, conduct their research, and prepare for exams on their own, these colleges that offer special attention to each student may not be the best fit for them.   Students should also look beyond academics while zeroing in on a college. Some of the main factors that should be studied are opportunities for internships, extra-curricular activities, the scope for exploring sports and the infrastructure to support it, and community involvement. These days universities also look beyond students' academic achievements while screening their applications. They look at their interests, how they perceive the world, why, and more.  A few colleges also expect essays about how students plan to explore different campus facilities.     Most importantly, how your budget accommodates the best fit is a significant factor to consider before sending out applications. Know the total cost of education over the usual academic costs. Consider expenses related to accommodation, food, commute, outside campus activities, internship costs, etc. Parents should assess if their family can afford these fees and if they need a scholarship or loan to lighten the loan on their finances. FAQs What factors should I consider to find the best-fit college? To ensure that you've chosen the best-fit college for yourself, check if the college's ranking, location, ROI, curriculum, faculty, crowd, fees, scholarships, and other facilities match your preference. If it does, then you have landed on the right choice. If not, do more research. How do I start looking for the best-fit college? First and foremost, decide on a subject that you want to pursue and a country you want to study in. Then, make a list of colleges and put them into different categories based on affordability, admission difficulty, ranking, ROI, housing facilities, location, etc. Once done, start applying. Consult an expert advisor to get the right plan TALK TO AN EXPERT

Deciding where to live after getting your acceptance letter is a tough decision. Students are often torn between the two most popular forms of living abroad- student dorms vs. apartments. The idea of living on your own is both exciting and anxiety-inducing. Adulthood and its accompanying responsibilities can easily throw you into a tizzy. Having your own space comes at the cost of having to do your own chores, managing your own expenses, running errands and so much more. It can all be a little too much at times.  You’ve figured out what degree you want, you’ve figured out which college offers the best educational plan for you, and you have your parents convinced. Figuring out where to live and how to live is the next step. Should you go for university-provided student housing or should you rent your own apartment? There are certainly pros and cons to both and luckily we are here to help you figure things out! Student Dorms Vs. Apartments: What to Expect from Dorm Life? Dorms are a kind of student housing common in many universities. Usually, dorms consist of either shared or private bedrooms and common living and dining areas. Your college will allocate you a dorm room and a roommate based on the preferences you indicate, and in some cases, you can even choose your own roommate.  Colleges have different kinds of dorms and student housing available. You should go through your college’s website thoroughly to ensure you have the proper information about the kinds of dorms they have available, the facilities available in these dorms, how they are allocated, and the costs involved. Dorms are a very good option for Indian students who study abroad. Studying abroad means that you leave behind most of your friend circle and support structure. Student dorms in colleges have orientation programs and resident advisors who can help you ease into social life at your university. Pros of Living in Student Dorms No Dealing with Realtors or Brokers: Renting an apartment can be a complicated venture. You are not likely to know the area, the property costs, or the other intricacies of the real estate market when you're in a new city. Opting for college-provided student dorms may be a more reliable and secure option for you. No Extra Utility Bills: Utility charges like electricity, water, and heating are often covered by colleges. Even if they charge you extra for these amenities, these bills would still be relatively cheap. Proximity to Campus: Dorms enable you to stay on campus or very close to campus. This saves you both time and commuting costs. More Social Life: Staying close to campus enables you to enjoy campus life and student activities better. Additionally, dorms often have planned student events and activities that can help you make friends more easily. Extra Amenities: Student dorms often have extra amenities like recreational centers, gyms, game rooms, and TV rooms. These amenities may be entirely free or available to residents at a small charge.  Cons of Living in Student Dorms Lack of Privacy: Student dorms are notorious for being too crowded with barely any privacy. You may be able to get a private room depending on your college, but common areas may still lack privacy.  Strict Rules: Dorms often have strict rules to ensure discipline. You may have restrictions on how many visitors you can have, noise levels, cooking, and maybe even a curfew. You may not be able to experience the independence for which you decided to study abroad. Lack of Space: Dorms are often crowded and lack space. You may be allocated a tiny shared room with barely any space to move in.  Student Dorms vs. Apartments: What is apartment living like? Apartments are independent residential units that can be rented either by contacting the landlord directly or through a real estate broker. Apartments provide more privacy and independence than dorms and are generally more spacious. College websites and social media groups associated with your college may have information about localities with apartments for rent for students. You can go through these pages to find brokers, landlords, reviews, and other information. Pros of renting an apartment More Privacy: Apartments give you more privacy. You don’t have to live cramped together with too many people and there is more privacy in common areas even if you live with roommates. Additionally, you have more control over choosing your roommates than in the case of dorms. More Space: Apartments are definitely more spacious than dorms. You also get private bathrooms and a full kitchen to cook your own food without restrictions. More Independence: Renting an apartment makes you more independent and self-sufficient since it comes with more responsibilities and chores. You will also have to be much more meticulous with budgeting and expense management. If becoming more independent was a motive for you to choose to study abroad, apartment life may be best for you. Cons of Renting an Apartment Dealing with Landlords and Brokers: To rent an apartment, you will have to deal with brokers and landlords. As a young international student with limited knowledge of the country, this may be a complicated task for you. It is easy for you to get scammed or abused by brokers or landlords when you study abroad. Utility Bills: Unlike in dorms, you will have to pay your utility bills separately when you rent an apartment. This leads to extra expenses. Less Security: Living off-campus means you don’t have access to campus security. Apartment living may be less secure than dorms, although this also depends on the location of your apartment. More Traveling: Off-campus living certainly entails a lot more traveling and commuting. You cannot simply roll out of bed and go to class as you would in a dorm since you have to take into account commuting time. What is the Right Choice for You? There is no right or wrong decision when it comes to choosing the perfect student accommodation. It is up to you to decide what kind of housing situation is the best fit for you. You will have to weigh the pros and cons as well as the actual financial expenses of renting an apartment versus a dorm room. Your financial obligations and constraints will differ depending on whether you are studying abroad with a scholarship, self-financing, or working part-time jobs. These will need to be factored in, along with rental costs in the city you are in to determine which option is more cost-effective.  Whatever choice you make, living away from your parents and being exposed to a foreign country is sure to make you a more independent and well-rounded person. This is what makes studying abroad worth it. 

The Russell 3000 Index is an FTSE Russell index that measures the top 3,000 firms in the United States. It accounts for 98 percent of the investable equity market in the United States.  Continue reading to learn more about the Russell 3000 Index, including its operating, limitations, and differences from other indexes.  What is the Russell 3000 index?  Russell 3000 is a stock market index, ranking the top 3,000 publicly traded companies in the United States by the criteria of market capitalization. The Russell 3000 accounts for roughly 98 percent of all U.S. equities due to its broad participation.  Each year in May and June, the index's composition is such that there is consistency for both new and expanding companies that may enter the index and diminishing companies that may leave it.   Furthermore, the FTSE Russell Group, which manages the Russell family indexes, evaluates all newly qualified firms that come up with an IPO (Initial Public Offering) - owing to which, there may be 3000 companies on the index.  Russell 1000 Index Read More Functioning of the index  The index's operation is based on objective criteria that accurately gauge performance and economic hazards. All securities must be available for trading on one of the following U.S. exchanges: CBOE, NYSE, NYSE American, NASDAQ, or ARCA are examples of stock exchanges.   7 SPACs, limited liability corporations, royalty trusts, and business development companies are among the firms not allowed to participate.  SPACs, limited liability corporations, royalty trusts, and corporate development companies are among the firms that are not allowed to participate. Other qualifying criteria to assess for inclusion in the index.  1. Closing price On the day the index rates firms, stock closing prices have to be at or above $1. If it's less than $1, the average daily closing price for the previous 30 days has to be at least $1.  2. Total market capitalization To be considered for inclusion, businesses must have a total market value of $30 million or more.  3. Available shares A minimum of 5% of a company's shares must be available in the market.   Let's look at the sectoral weightings and some companies in the index  CompanyTickerApple Inc.AAPLMicrosoft CorpMSFTAmazon IncAMZNTesla IncTSLAAlphabet Inc Cl A (Google)GOOGLAlphabet Inc Cl C (Google)GOOGNvidia CorpNVDAMeta Platforms IncFBBerkshire Hathaway IncBRK.BJPMorgan Chase & CoJPMNote: Google appears due to diverse share classes. The Russell 3000 index limitations  The Russell 3000 ranks companies based on their closing price, total market capitalization, available shares, etc. However, it does not have a profitability criterion like other indexes, as the S&P 500 does.   Some Russell 3000 companies have not been profitable for four straight quarters. Investors should keep this in mind when evaluating the companies in the Russell 3000 index.  What is the Russell 2000 Index? READ NOW How to make money in the Russell 3000 index?  While buying individual shares of each firm represented in the Russell 3000 index is feasible – it is very time consuming for the average investor. It's significantly easier to buy an exchange-traded fund (ETF) or an index fund that tries to replicate the index's performance by holding the equities of its thousands of component companies.  iShares Russell 3000 ETF and Vanguard Russell 3000 ETF are some ETFs that invest in the Russell 3000 index. Along with ETFs, mutual funds like Vanguard Russell 3000 Index Fund and iShares Russell 3000 Index Fund invest in the above-said index.  Should you put your money in the Russell 3000 index?  The Russell 3000 index monitors the overall market but may over-represent large-cap firms due to its weighting - it may not be a negative thing when assessing the economy's performance, as these businesses are significant drivers of the economy's movement.   However, if you're using it as part of a broader index-fund-based investing plan that typically contains a perfect balance of large-cap, mid-cap, and small-cap firms, you may want to add additional indexes.   With this in mind, you may want to invest in the Russell 1000 and Russell 2000 indexes independently from the Russell 3000 – allowing you to obtain exposure to (almost) the entire spectrum of U.S. companies while retaining the opportunity to better adjust your large-cap to the small-cap and mid-cap ratio by purchasing extra Russell 2000 funds. FAQs What are some of the top companies in Russell 3000? The Russell 3000 Index contains about 96% of the US equity market. Some of the top companies under the index include Apple Inc, Amazon Inc, Meta Platforms Inc, JPMorgan Chase & Co, etc. How are companies ranked in the Russell 3000 index? The index ranks companies based on their total market capitalization, closing price, available shares, etc. What's the total market cap for the Russell 3000 index companies? To be considered for the Russell 3000 index, companies must have a total market value of $30 million or more. Consult an expert advisor to find the right plan for you  TALK TO AN EXPERT

Equity mutual funds are investment instruments that primarily invest in stocks of various companies across different sectors.   The aim of the fund manager is to maximize returns by allocating money among stocks with the help of screening criteria such as market capitalization or by investing in stocks of varying sectors.  Equity mutual funds are the riskiest category of mutual funds because of the high exposure (at least 65%, according to the rules laid down by the Security and Exchange Board of India) to equity markets.   However, this also leads to higher returns (on average) than other classes of mutual funds.  The risk involved in this investment arises from the general market conditions and the specific sectoral performance. A good option for investors looking to grow their capital over the long term, with considerable exposure to the stock market, is an Equity mutual fund.  Investment in these funds is possible through the SIP (Systematic Investment Plan) format and lump-sum format. Investors with different objectives and risk profiles have other options (among equity mutual funds) to invest in. Difference between Equity and Equity mutual funds  Direct investment into equity means purchasing stocks of listed companies directly through your Demat account.   In contrast, when you purchase an equity mutual fund, you are giving your money to the fund manager managing that fund to invest primarily in equity and some investment in other instruments to balance the fund.  While investing directly in equity, you have to decide which company to invest in and other related decisions. When you invest in equity funds, you choose to choose the fund, and the fund manager takes care of the further details, like the fund will constitute what companies' shares, in what ratio, etc.  Also, mutual funds offer diversification by giving us the option to make investments in diverse companies and sectors through an equity mutual fund, thereby exposing us to a more significant section of the market and possibly reducing our risk.   Investment in these funds is possible through the SIP (Systematic Investment Plan) and lump-sum formats. Investors with different objectives and risk profiles have other options (among equity mutual funds) to invest in. These are the main difference between direct equity and equity mutual funds investment source: freepik Different types of equity mutual funds 1. Categorization based on the market capitalization of companies Large-cap funds, Mid-cap funds, Small-cap funds, and Multi-cap funds.   Market capitalization tells us about the company's size; it is calculated as follows: Market Cap = Price of share * No. of shares outstanding  Companies having a market cap of more than Rs. 20,000 crores are known as large-cap companies. A mid-cap company has a market capitalization between Rs. 5,000 and Rs. 20,000 crores and small-cap companies have a market capitalization of less than Rs. 5,000 crores.  2) Sector funds These types of equity mutual funds invest the majority amount in particular sectors; that is, there is a concentration of investment into specific sectors in the economy, like FMCG, pharma, technology, PSUs (Public sector undertakings), etc.  3) Theme-based funds Theme-based equity mutual funds are pretty similar to sectoral funds because they invest in "themes" like ESG (Environmental, Social, Governance), Make in India, Digital India, and many other themes in the public and private sectors.  4) Focused funds Investments via these funds mean that more than 65% of investments are in equity only and related investments.  5) Contra funds Just as the name says, contra equity mutual funds follow contrarian investing methods – identifying potential market winners and investing in them.  6) Taxability-based categorization ELSS (Equity linked savings scheme) funds allow for deductions under section 80C of the Income Tax Act.  How do equity mutual funds work?  Equity mutual funds work simply. To state it in words, equity mutual funds invest more than 60-65% of their assets in stocks of different companies.  The fund manager tends to invest in names to maximize the overall return from the fund.  Are equity funds the same as mutual funds?  Equity funds are a type of mutual fund that primarily invests in equity shares of companies. FAQs Are equity mutual funds good? Equity mutual funds usually have a high potential to earn great returns among all mutual funds. However, with high returns, a high risk is also included. Hence, investors with a higher risk appetite are considered suitable for these funds. Which equity mutual fund is the best for me? Deciding the best equity mutual fund for oneself depends on a lot of factors that have been discussed above. However, here are some top options based on their annualized 5-year returns - PGIM India Midcap Opportunities Fund, Parag Parikh Flexi Cap Fund, Axis Midcap Fund, etc. Is equity mutual fund good as a long-term investment plan? Long-term investment plans bring wealth creation for investors. And that's where Equity Mutual Funds shine. Consult an expert advisor to get the right plan for you TALK TO AN EXPERT

The Dow Jones Industrial Average (DJIA) is possibly the most commonly followed financial market index globally. Yet, very few people know that it represents just 30 businesses.  The DJIA's Beginnings  The Dow Jones Industrial Average was set up on May 26, 1896. Charles H. Dow, one of the founders of Dow Jones & Company, came up with the Dow (formed in 1882).  The first Dow Jones index was constituted in 1884. There were 11 transportation-related stocks in the portfolio. The original index was called the Dow Jones Rail Average.   The Dow Jones Transportation Average was created in the 1970s to include air freight and other modes of transportation.  Dow soon discovered that industrial companies grew in value faster than railroads. He then created a new index by combining the stocks of 12 different companies.   It was dubbed the Dow Jones Industrial Average by Charles. Initially, it was the average of industrial firms in the cotton, sugar, tobacco, and gas industries. What is Dow Jones Industrial Average? The Dow Jones industrial average is a stock market index that tracks the Dow Jones Industrial Average (DJIA).  Dow Jones Industrial Average (DJIA), usually known as "the Dow Jones" or simply "the Dow," is one of the most well-known stock market indicators.   It tracks the daily stock market movements of 30 publicly traded firms in the United States, either on the NASDAQ or the New York Stock Exchange (NYSE). The 30 publicly-held corporations are among the economic leaders in the United States.  The Dow Jones Industrial Average components  There are no set criteria for a business's inclusion in DJIA's 30 company stocks. However, to be included in the DJIA, a corporation must make up a significant portion of its business in the US economy.   The corporation should also be registered on NASDAQ or NYSE and belong to the industrial sector's top players. CompanyStock Ticker SymbolIndustryLatest Addition to Index3MMMMConglomerate1976 / 08 / 09American ExpressAXPFinancial Services1982 / 08/ 30AppleAAPLTech2015 / 03 / 19BoeingBAAerospace1987 / 03 / 12CaterpillerCATConstruction1991 / 05 / 06ChevronCVXOil & Gas2008 / 02 / 19CiscoCSCOTech2009 / 06 / 08Coca-ColaKOFood and Beverages1987 / 03 / 12DisneyDISEntertainment1991 / 05 / 06DowDuPont IncDWDPChemical Industry2017 / 09 / 01Exxon MobilXOMOil & Gas1928 / 10 / 01Goldman SachsGSFinancial Services2013 / 09 / 20Home DepotHDRetail1999 / 11 / 01IBMIBMTech1976 / 06 / 29IntelINTCTech1999 / 11 / 01Johnson & JohnsonJNJPharmaceuticals1997 / 03 / 17JPMorgan ChaseJPMFinancial Services1991 / 05 / 06McDonald'sMCDFood1985 / 10 / 30Merck & CompanyMEKPharmaceuticals1979 / 06 / 29MicrosoftMSFTTech1999 / 11 / 01NikeNKEApparel2013 / 09 / 20PfizerPFEPharmaceuticals2004 / 04 / 08Procter & GamblePGConsumer Goods1932 / 05 / 26Travelers Companies IncTRVInsurance2009 / 06 / 08United TechnologiesUTXConglomerate1939 / 03 / 14UnitedHealthUNHManaged Health Care2012 / 09 / 24VerizonVZTelecom2004 / 04 / 08VisaVFinancial Services2013 / 09 / 20WalMartWMTRetail1997 / 03 / 17Walgreens Boots AllianceWBARetail2018 / 06 / 26 How are stocks weighed?  The DJIA is a price-weighted indicator – it means that businesses with more costly stocks are given more weight in the Dow. Market capitalization, the entire market value of all of a company's shares, is not factored into the DJIA's price weighting.   As a result, corporations with fewer pricey shares have a more significant impact on the Dow's value than companies with a large number of less expensive shares.  The Dow's strategy differs from other prominent indexes that measure the stock market's overall performance, such as the S&P 500 or the NASDAQ. When evaluating how much influence a firm will have in an index, these take its market capitalization into account.  What is the best way to invest in the Dow Jones Industrial Average? The DJIA can be used as a proxy for the overall performance of the US economy because its constituents are among the most significant public corporations. Many investors prefer index funds modeled on the Dow Jones Industrial Average.   Finally, If you purchase a new stake in a DJIA index fund, you have exposure to all 30 Dow components in your portfolio giving you simple access to businesses with a demonstrated track record of profitability and sound business practices. FAQs What is meant by the Dow Jones Industrial Average? Dow Jones Industrial Average (DJIA), usually known as "the Dow Jones" or simply "the Dow," is one of the most well-known stock market indicators.   It tracks the daily stock market movements of 30 publicly traded firms in the United States, either on the NASDAQ or the New York Stock Exchange (NYSE). Why is it called the Dow Jones Industrial Average? The Dow Jones Industrial Average was set up on May 26, 1896. Charles H. Dow, one of the founders of Dow Jones & Company, came up with the Dow. It is named after its founder. How are stocks weighed in Dow Jones Industrial Average?  The DJIA is a price-weighted indicator – it means that businesses with more costly stocks are given more weight in the Dow. Consult an expert advisor to find 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.

Parenthood is the best experience for all humans. However, it is also true that raising a child comes with huge expenses that can challenge your finances if you are not well-prepared.  Education forms a significant chunk of all the costs incurred in raising a child. Thus, planning your child's education is as crucial as retirement planning for yourself.  Let us see in this article how one should go about education planning what assets one should explore, and the role of real estate in your portfolio, in accumulating the corpus for your child's education. How to plan your child's education?  Planning your child's education starts in the early stages of a child's life. Today, higher education is quite expensive and costs around Rs 20-25 Lakhs for a degree in India.   This number increases further if you are looking for a foreign education for your child. Additionally, the currency depreciation that the Rupee (INR) is witnessing against currencies like the USD adds to the parent's worry.   While estimating the cost of education and tuition fees, you should look at other costs such as accommodation, transportation, stationery and books, coaching, etc. You can explore EduFund's unique cost calculator.  Let us now talk about planning your child's education financially and the steps involved.  Step 1. Estimate the Cost of Education Parents have to make an active choice for   Place of education  Tier of school  Type of course or field for the child to study in You will also need to consider whether your child wants to study abroad or prefers a domestic education. The education cost in India is increasing at a high rate.   Beginning from the admission process to the entire school life, parents increasingly find it challenging to meet the increasing fee structure and other costs associated with education.   Inflation in education has led to rising costs. The education inflation trend has been 10-12 percent over the years, double that of household inflation.   For example -   A 4-year engineering course costs around Rs. 12 lacks.   10 years, the cost will likely increase to Rs. 31 lacks By 2038, it would cost around Rs. 61 lacks to get an engineering degree.  Step 2. Decide the time horizon Calculate your child's graduation or post-graduation time.  Step 3. Analyze your current assets and liabilities This helps to know the current financial position to help the parents plan better.  Step 4. How much to save? Once you estimate the cost of education, decide how much to save in a lump sum or a monthly contribution.  Step 5. Investment Planning  Plan a proper asset allocation that is well-diversified and reflects suitable risk-adjusted returns.   For example - Suppose you have a long-term horizon to accumulate the corpus. In that case, you should consider equity as an investment asset class in the portfolio.   As you come closer to the goal, your allocation on debt tends to increase, and distribution inequity reduces.  Step 6. Start investing  Real estate as an asset class  In general, real estate is considered a great investment option in India. The two types of real estate investment options are   Residential properties   Commercial properties Real estate can be an excellent alternative to many investment options that offer lower risks, yield better returns, and diversify.   Characteristics  Durability: Investment doesn't come with a fixed maturity plan and has the possibility of creating wealth for multi-generation  Immobility: Real estate investment is very illiquid in nature.  Transparency: When purchasing a property, there could be a possibility that the seller is withholding information.  The cost involved: A significant lump sum is locked in to pay initially when purchasing a property.   Additionally, housing loans help to bridge the gap between savings and the cost of acquiring a property. Post-down payment and a monthly mortgage payment include a part of the principal and the interest on the loan.   Registration and Stamp duty payments need to be made to the legal owner of the property. In addition, there are various other charges such as preferential location charges, maintenance charges, parking charges, and taxes like Goods and Service Tax, property tax, capital gains tax, etc. Why is real estate not a good option for a child's education investment?  One main reason real estate is not a good investment option is its illiquid nature. Because education is a defined event and cannot be pushed further, the parents must be ready with the required corpus before the child is ready for school/college (as applicable). If an investor is required to sell the property in a short duration, it could lead to distress selling, where the seller faces a substantial loss compared with the current market value. On the front of the returns, the rate of return does not justify the costs and taxes incurred in property investment after adjusting for inflation. Interest on loan and mortgage payments further reduces the actual value of return received on property investments.   Due to inflation, the return is just a poor single-digit number lost in many years. It also requires more initial capital in the form of a down payment which may be difficult for parents in the initial or mid-stages of their careers.   Calculate SIP for Child Education Buying a property vs. systematic investing  Let us consider a case where Mr. A buys a house to fund his child's education after 16 years, and Mr. B considers investing in mutual funds via SIP for the same duration.   1. Case of Mr. A  In the first case, Mr. A makes a down payment of Rs 10 lakhs (10% of the current property value) and gets an EMI of Rs 79,892 for the period of 15 years. He then sells the property in the 16th year. The real estate growth estimation is at 6.5%.  2. Case of Mr. B  Mr. B starts a SIP of Rs 50,000 per month when the child is born for a long-term period of 15 years. Source: Edufund Research Team Table showing the investment in real estate vs mutual funds. Mr A – Outflow is the sum of the down payment and all the subsequent EMIs.Mr B – Outflow is the sum of all the SIP.Source: EduFund Research Team Note: Outflow is the total money paid by Mr A and Mr B. Graph showing the difference in the outflow and total value of the investment in real estate and mutual funds The difference in cash outflow (Total EMI vs. Total SIP) is considerable at Rs 53 Lakhs - is because when an individual starts paying EMI, he ends up paying the principal and interest component, both due to which the cash outflow is high.   Further, when we consider the amount accumulated in SIP after 16 years and the amount recovered from the property sale, there is a staggering difference of Rs 40 Lakhs.  Thus, the total benefit in mutual funds over real estate stands at nearly Rs 1 crore. We see that investing in real estate creates a hole in the investor's pockets. Moreover, many investors may not have such a substantial initial lumpsum readily available to invest in.   Mutual funds provide the feasibility to start with SIP and increase the amount gradually. But for a housing loan, a minimum down payment is a must.   EMIs for housing loans are like an expense for an individual. Whereas SIPs are like reasonable EMIs where an investor earns interest on their periodical installments.   Also, mutual fund SIPs have the power of compounding, whereas real estate investments only have an average inflation rate that gets added to the asset value year on year.  To plan your child's education, you should also ensure that your portfolio has the necessary liquidity. The property sale is a difficult and lengthy process, requiring time in hand. Mutual fund redemption is instant, and the investor receives the funds in 2-3 business days. The properties in a preferential location have a reasonable appreciation rate, but that may not always be the case.  Distress selling takes place in case of an urgent need for money through a property sale, that is, property sold at much less than the actual market value.  But in the case of mutual funds, even during emergencies, the investments are sold at market value. Therefore, transparency and liquidity are more in mutual fund investments.  These points are more than enough for a parent to choose mutual funds or other alternate investment options over real estate while planning their kid's education. Consult our expert to discuss the right plan for you. TALK TO AN EXPERT FAQs Which mutual fund is the best to plan for a child's education? The best choice of mutual fund scheme varies highly from investor to investor. One shoe doesn't fit all. Hence, it is important for investors to understand their goals, risk level, time horizon, etc, to find the best mutual fund. However, some of the top AMCs offering mutual funds that investors can explore on the EduFund App include UTI, HDFC, ICICI, DSP, etc. How much money do I need to start investing for my child's future? There's a common misconception that only rich people can invest. The truth is that you can start a SIP for as low as 100 rs/ month. Explore your options on the EduFund app and make an educated decision with the help of our Savings Experts. How can I save money for my child's education? There are many ways to start saving for your child's future education. Some common ways are - investing in mutual funds, putting money in eligible saving bonds, buying digital gold from licensed sources, investing in US ETFs to prepare for foreign education, etc.

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.

ETF (Exchange-Traded Fund) A potluck is an excellent symbol of an ETF. We have all been to a potluck party; what do we do?  We combine all we have brought and then fill up a plate with the different assortments! An ETF is similar to this mixed plate. An ETF is like a mutual fund; however, it isn’t the same.  A mutual fund is a collection of various securities based on the theme of that particular fund. These securities are bundled together and sold as a unit.  The investors thus receive these units, which are representative of the investments made by the fund manager. ETFs, help laymen investors grow their wealth with ease and convenience.  An ETF eliminates the time and resources an investor would have to devote if they have to make a strategy for investments manually. An ETF manager replaces this need for research for the investor.  Similarly, an ETF is like a mutual fund that traces security, commodity, or asset based on the type of ETF one chooses. An ETF is a marketable security traded in the stock market, just like shares.  Where are ETFs registered? An ETF is registered with the US Securities and Exchange Commission (SEC) in the New York Stock Exchange or the Nasdaq and with the Securities and Exchange Board of India (SEBI) if traded in the National Stock Exchange (NSE) or Bombay Stock Exchange (BSE)  The ETFs have a ticker symbol similar to stock symbols, and they can be easily bought and sold through a broker. The price of an ETF fluctuates all day, just like stocks as per market movements.  The value depends upon the fluctuations in the underlying assets of the resource pool. Unlike mutual funds settling only once a day, one can easily buy or sell these ETFs during market trading hours.  Exchange-traded funds have mostly been there for retail investors like you and me, which will resemble the performance of the underlying assets. However, ETFs have grown popular among hedge funds and institutional investors nowadays.  Some of the biggest ETF management companies are Blackrock, Vanguard, State Street Global Advisors, Invesco PowerShares, etc. Several types of ETFs try to replicate a specific index or a benchmark with the help of the underlying asset allocation.  Types of ETFs ETFs track market sectors as a whole. Different types of ETFs are Commodity ETFs Sector and industry ETFs Bond ETFs Foreign currency ETFs  And others! Specialty funds are a very peculiar type of ETF. An inverse fund tracks an index or a benchmark inversely, which will gain when the particular index performs shabbily. Let us go through all these types of Exchange Traded Funds.  ETFs have proven to be quite resourceful and pocket-friendly for investors looking to invest in specific asset classes, sectors, commodities, etc. Such investors save their research time as well.   Their low cost has opened gateways for all types to invest in thematic funds and hence are also suitable for long-term holdings. People eyeing a sector-themed investment have benefited from such ETFs.   Investors are also using ETFs to hedge their portfolios against possible market fluctuations. If their portfolio goes for a ‘see’, investors have an ETF that goes for a ‘saw’, thus providing the golden balance just like a perfectly swinging see-saw.   Historically, ETFs have been a revolutionary investment product. 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 are some popular ETFs? One of the most known and oldest surviving ETFs (that tracks the S&P 500 Index) is the SPDR S&P 500 (SPY). What are the top 3 ETFs to buy? Some of the top ETFs include Vanguard 500 Index Fund, Invesco QQQ Trust, and Vanguard Growth Fund.

There are multiple ways to accumulate wealth through investing in a mutual fund. Here's all you need about the Lumpsum vs SIP vs Step-up SIP, to make the right investing decisions discuss some conventional and modern methods of financing. 1. Lumpsum  One of the most popular and oldest ways of investing in mutual funds is making a lump sum investment. It is a one-time bulk investment in a mutual fund. The time of entering the market is crucial in lumpsum investment. It can give you good returns when the market is in a bull run but may not provide returns in a bear run. No one knows exactly when a bull market is ending, and a bear market is starting. The investments' entry and exit are crucial, depending on market conditions. 2. SIP A SIP or a Systematic Investment Plan, involves a fixed amount going towards a mutual fund; on a daily, weekly, monthly, quarterly, half-yearly, or annual basis. A SIP is the most common way of investing in a mutual fund. There are multiple benefits of investing through a SIP. The minimum amount required can be as low as ₹100/month, and the rupee averaging cost and the power of compounding helps to develop financial discipline. You don't need to track the market daily. 3. Step-up SIP Step-up SIP is the lesser-known way of investing in a mutual fund. With this way of investing, SIP can be increased on a half-yearly and yearly basis. As in percentage or numbers of the current SIP. This option of funding can be chosen for multiple reasons you're starting early in your career, have a low budget, cannot save much in the initial phase, or want to check how SIP works. Let's understand all three ways with the help of an example Let's say you want to save for your child's higher education, who is just born. So, ideally, you have 16 years to invest until your child reaches that age; by then, the cost of graduation would be around ₹10,00,000. You will make an investment in the BSE Sensex Index to take advantage of the growth of the entire index. Now, let's understand which could be the ideal way to save for your child's future as per your budget. ParticularsLumpsumSIPStep-Up SIPNo. of Years161616Target Amount₹ 10,00,000₹ 10,00,000₹ 10,00,000Initial Investment₹ 1,70,000₹ 1,900₹ 1,000Total Invested Amount₹ 1,70,000₹ 3,64,800₹ 4,31,397Accumulated Amount₹ 10,16,330₹ 10,19,286₹ 10,07,229Note: Period understudy is between Jan’06-Dec’21. The step-up amount is considered 10% annually. Source: EduFund Research Team Note: The period understudy is between Jan’06 - and Dec’21.Source: EduFund Research Team Note: The period understudy is between Jan’06 - and Dec’21.Source: EduFund Research Team Which is better? In all the scenarios, an investor has made the wealth or the corpus needed for his child's higher education. The amount invested is different for different modes of financing. You can figure out which could suit you the best from the above table. Suppose you don't have a sufficient bulk amount to achieve the target corpus. Then, you can consider investing through the SIP route, which requires a monthly SIP of ₹1,900 over the period. But even if you cannot afford to invest ₹1900/ month. The last option that you can consider is Step-up SIP which requires less amount at the initial phase of the investment, but by the end of the journey, the amount of SIP can go up to ₹4,200/month. Choosing multiple options can help you to maximize your returns. Income, investing objectives, financial stability, and risk are some factors to consider when choosing the option of investment. One should consider the risk involved when choosing any way of investing. Over time, wealth accumulates with the power of compounding acting upon the increasing investment base. It's not a one or two-year play. The best way of investing in a mutual fund is SIP which will not hurt your pocket, minimize the risk, reduce the volatility, and create wealth. FAQs Which kind of SIP gives the highest returns? As of Feb'23, Quant Tax Plan- Direct-Growth Fund is a SIP plan offering the highest 5-year returns investing in precious metals, consumer staples, financial, and energy. Is a one-time investment better than SIP? One-time investment or lump sum fluctuates as the market moves. SIP, on the other hand, averages the cost of units. So, which option is better depends on the individual investor. You can choose an option based on your investment objective. What's step-up SIP? This is a different and lesser-known way of investing where you can increase your SIP amount on a yearly or half-yearly basis.