Active Mutual Funds Vs Index Funds Vs ETF
An Exchange-traded Fund (ETF) stands for the exchange-traded fund this is a type of asset or security that tracks an index sector or specific type of investment. For example, if you’re buying an ETF to trade stocks. One share of an ETF can contain hundreds or thousands of different assets such as publicly traded companies so you’re owning hundreds or thousands of stocks within your one ETF.
Comparison Basis | Active Mutual Funds | Index Funds | ETFs |
---|---|---|---|
Expense Ratio(management fees) | High | Medium | Low |
Demat Account | No Demat account required | No Demat account required | Yes Demat account required |
Liquidity | It has high liquidity as more number of investors | It has high liquidity as more number of investors | It has Low liquidity as Less number of investors |
Effort | Efforts are required to manage the fund | Not much effort is required to manage the fund | Efforts are required to understand the pricing |
What are Index Funds?
Diversification is important to be a good investor, so people buy mutual funds and start investing, but it also has some risks. Now, to decrease the equity market risk. Investors start looking for Index Funds. Here we will talk about Index Funds along with their benefits and a lot more.