Understanding ETFs: 4 types of exchange-traded funds that investors should know before investing

economictimes.indiatimes.com:

ETFs, or exchange-traded funds, altered the landscape of investing for retail investors. Launched on the NSE (National Stock Exchange) on January 8, 2002, the ETF witnessed trading of Rs 1.30 crore on its very first day, according to the data of the NSE. This novel financial instrument was proof that one does not have to be an expert analyst to be able to park money in different asset classes.

ETFs opened a large pool of opportunities for investors, where they could get exposure to a diversified portfolio at a low cost that could also be traded like equity. As a result, since its inception, it has experienced an exponential surge in its market size. According to Mirae Asset Group, AUM (assets under management) in the ETF market has grown fivefold since 2018.

It has, in turn, posed a myriad of opportunities for lucrative returns for investors. Now, let us understand what ETFs are.Exploring ETFs Exchange-traded funds, or ETFs, are a type of security that frequently tracks an underlying asset. These securities include bonds, shares, money market instruments, and more.

ETFs are, to put it simply, a combination of many investment avenues. The best qualities of equities and mutual funds, two well-known financial assets, are combined in them. ETF funds have certain form, rules, and management in conjunction with mutual funds.