What are ETFs?


What are ETFs?
In comparison, those investing in a traditional mutual fund can purchase units only at the fund’s NAV, which is published at the end of each trading day. The trading and settlement mechanism of ETFs is similar to that of a regular equity share. Their trading prices are very close to their NAVs, unlike the substantial premiums/ discounts associated with closed-ended funds that also trade on the exchanges.
The ETF advantage
ETFs can also act as hedging tools; they can be sold short if the market outlook is negative. A hedge can be created by shorting them against long stock holdings. Since ETFs don’t require any hands-on management to tackle risk while increasing returns, it makes them a winner for many an investor.


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