What Is an ETF?
An index fund that trades like a stock. How it works and how it differs from a regular fund.
An ETF (Exchange-Traded Fund)An index fund that trades on the exchange like a stock. is a fund — usually an index fundA fund that simply tracks a market index at very low cost. — that trades on the stock exchangeA regulated marketplace where shares are bought and sold. like a single shareA unit of ownership in a company.. You buy and sell ETF units through your brokerAn intermediary licensed to execute your trades. during market hours, at a live price that moves second by second.
- IndexA basket of stocks tracked together to represent a market. mutual fundA pooled investment managed for many investors at once. — you buy/sell with the fund house once a day at the end-of-day NAV; you invest in rupee amounts and can run SIPs easily.
- ETF — you buy/sell units on the exchangeA regulated marketplace where shares are bought and sold. anytime markets are open, at the live market price, just like buying a stock (you need a dematAn electronic account that holds your shares. + trading accountThe account used to place buy and sell orders.).
ETF or index fund — which should a beginner pick?
For most beginners doing regular monthly investing, a plain index *mutual fund* is simpler: easy SIPs, no demat, no worrying about live prices or liquidity. ETFs shine if you already have a demat/trading setup and prefer intraday flexibility or specific niche exposures.