EXCHANGE TRADED FUND

Submitted To Prof. RKRHODDept. of Business AdministrationAUS

Submitted By:SUJOY KUMAR PAUL (03)ABHISHEK DUTTA (07)PRITHWIRAJ DAS (08)

• ETFs are essentially mutual fund schemes or index funds that are listed and traded on the exchange like stocks. ETFs are priced continually and can be bought or sold through out the trading day. Buying or selling ETFs is as simple as buying or selling any other stock on the exchange allowing the investor to take advantage of intra day price movements.

• ETF can be bought or sold just by a call to the broker or through the internet trading account. This provides investors the power to react swiftly to changes in the market and place limit orders while trading.

EXCHANGE TRADED FUND

TYPES OF ETF

• Index ETF

• Commodity ETFs

• Liquid ETFs

INDEX ETF

• Most ETFs are index funds that hold securities and attempt to replicate the performance of a stock market index. An index fund seeks to track the performance of an index by holding in its portfolio either the contents of the index or a representative sample of the securities in the index.

COMMODITY ETFS

• Commodity ETFs invest in commodities, such as precious metals and futures. Among the first commodity ETFs were gold exchange-traded funds, which have been offered in a number of countries. The idea of a Gold ETF was first officially conceptualized by Benchmark Asset Management Company Private Ltd in India when they filed a proposal with the SEBI in May 2002.

LIQUID ETFS• Liquid ETFs are funds whose unit price is derived

from Money market securities comprising of government bonds treasury bonds, call money market etc.ETFs are immediately tradable; therefore, the risk of price movement between investment decision and time of trade is substantially less when ETFs are used in lieu of traditional funds.

ETFs V/S Stocks and Mutual Fund

Functionality ETFs Stocks Mutual Funds Unit

Can be purchase through NSE broker or online trading account

Yes Yes No

Ability to put limit orders Yes Yes No

Real time trading and pricing throughout market hours

Yes Yes No

Returns at par with the market/index

Yes No No

ADVANTAGES OF ETFS

1. Buy and sell just like share

2. Buy and sell at real time shares

3. One can put limit orders

4. Delivery in your demat account

5. Minimum trading lot just one unit

6. No wealth tax

7. No storage issue or fear of theft

HOW TO INVEST

• Resister with your broker

• Fill up the KYC form

• Open a demat account

• ETFs are in dematerialized form and settled like any other share the T+2 rolling settlement.

SELECT AN ETFLOG INTO YOUR TRADING ACCOUNT OR CALL YOUR

BROKERPLACE ORDER

LISTED ETFS ON NSE• Equity ETFs

LIQUID & GOLD ETFS

13

WHAT IS THE ETF CREATION/REDEMPTION MECHANISM?

Inves tor

Brokerage

account

Cash

ETF Shares Securities

ETF Authorized Participants

Capital Markets

Creation Units Basket of Securities

ETF Fund Advisor

Cash

APPLICATIONS OF ETFS

• Efficient Trading

• Equitising Cash

• Managing Cash Flows

• Diversifying Exposure

• Filling Gaps

• Shorting or Hedging

Thank you