The investment objective of ETFs is to provide investment returns that closely match the total returns of the securities as reflected by the index it tracks.

Stock market investments have their own share of volatility and returns may not follow a linear path. For those who want to invest for the long term and are already investing through mutual funds, here is another variant called exchange traded funds (ETF) that you can check out.

Unlike mutual funds, the ETF units are traded on the exchange during trading hours. So you can buy and sell ETF units like you buy stocks when the exchanges are open. Anyone with a demat account with a brokerage firm can trade ETFs.

An ETF typically tracks one specific index, so investing in it means you end up buying all of the index’s stocks in the same proportion as those in the index.
When selecting ETFs, the volume of traded units representing liquidity is an important factor to look at. Also, the market price of the ETF may differ and be higher or lower than the NAV.

While volatility in stock prices can continue, there is no need for someone who is raising money for the long term to time the market. ETFs help to accumulate units at lower prices on days when the market is experiencing high volatility.

There are several ETFs available in the market, some of which track the leading indices like Nifty 50, Nifty Next 50 while some track the sectors like pharma, auto, banking etc.

Here are 5 ETFs by market capitalization and sectors that generally trade at high volumes:


The ETF that allows you to buy the Nifty 50 is the NIPPON India NIFTY BeES ETF, which is the oldest and largest and has ample liquidity and so can be considered as part of your long-term portfolio. There are also other Nifty 50 ETFs available from various fund houses.

Some other ETFs include:

Linked to Nifty Next 50 index

Linked to Nifty Midcap 150 Index

Linked to Nifty Midcap 100 Index

Linked to Nifty 100 Index

Linked to Nifty Bank Index

Linked to Nifty IT Index

Linked to CPSE ETF Index

Linked to NIFTY Pharma Index

Linked to Nifty Auto Index

Linked to Nifty Consumption Index

The investment objective of this and all other ETFs is to provide investment returns that closely match the total returns of the securities as reflected by the index it tracks, barring tracking errors. One may consider building a portfolio by diversifying into two or more such ETFs by spreading investments across market capitalization and sectors.

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