An exchange-traded fund (ETF), similar to a mutual fund, is a collection of securities. However, unlike a mutual fund, an ETF is actively traded on stock exchanges throughout the day, enabling investors to buy and sell it similar to individual stocks.

When you invest in a mutual fund, the AMC collects your money to purchase securities and reveals the NAV at the day’s close. Similarly, when you redeem your mutual fund units, the AMC sells the securities and returns your investment. This process is relatively straightforward. However, in the case of ETFs, interactions with the AMC are minimal since most buying and selling activities take place on the stock exchanges. It essentially involves the exchange of units between buyers and sellers on the exchange.

When delving into the investment realm, it’s essential to understand your investment persona. Are you inclined towards stocks of established large companies? Perhaps bonds appeal to you for their stability. Or maybe you seek to hedge against inflation by investing in gold. The same principle applies to ETFs.

Once you’ve identified your investment preferences, you can explore the variety of ETFs available within your chosen category.

The Factors Need to be Check

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