Exchange

Traded Funds
(ETF)
Presented by :- Nishant Chaudhary and Shreyash
Satam
 Agenda

What are ETFs? 1 Taxes related to ETFs 5

Difference between ETFs, Stocks and Mutual

Types of ETFs. 2 6
Funds

Investing into ETF’s 3

Advantages of ETF’s 7

Uses of ETFs in investments. 4 Disadvantages of ETF’s 8

 What are ETFs
• ETF stands for Exchange Traded Funds
• ETF tries to replicate the performance of the index
• Fund mangers of ETF do not pick the stock rather
they invest the same proportion in the same stock
as the index
• Price fluctuations happening all day because of buy
and sell
• ETF units get the same exposure as buying the
index
 Types of ETF’s

Index Bond Commodity Currency

Tracking specific Owns a portfolio Tracking price Exposure to

market indices of bonds movements of foreign markets
commodities (forex)
 Investing into ETF’s
As a Fund As a Stock

• To track an index • Trading flexibly (intraday)

• Open ended Mutual funds • Real time price
• Low expense ratio • Put limit orders
• Low turnover • Minimum trading lot = 1 unit
• More transparency • Delivery into Demat A/C
 1 Lower Costs

2 Buying and selling flexibility

Uses of ETF’s in
Investment
3 Tax Efficiency and Transperancy

4 Market exposure and diversification

 Taxes related to ETFs

• Taxes on Equity ETFs are applicable for 15% tax

on short term capital gains
• In case of long term capital gains a tax of 10% is
applicable on Equity ETFs
• There is no transaction cost on buying the ETFs,
however transaction cost of 0.001% is charged on
selling the ETFs.
Difference between ETF’s, Stocks and Mutual Funds
Functionality ETF’s Stocks MFs

Real time trading & pricing through the market hours Yes Yes No

Option to purchase through brokers or online trading a/c Yes Yes No

Can be traded real time on the Exchange platform Yes Yes No

Diversification possible with a single unit Yes No Yes

Returns at par with the market / Index Yes No No

Paper less investing Yes Yes Yes

Exit Load No No Yes

 Advantages
of ETFs

• Diversification at lower cost.

• Can be bought and sold like stocks
in real time.
• There is no minimum trading lot.
• Lower expense ratio and transaction
tax
 Disadvantages
of ETFs
• ETFs can be very volatile for narrow
market sectors
• Lower portfolio turnover than mutual
funds
• There may persist, tracking error resulting
in discrepancies
• The control over the investment is low for
the investors
Thank you!