Best 7 ETF to Invest In 2024 | Top ETFs to Invest for Long Term | ETF Investing for Beginners

Summary

The video script discusses the importance of careful investment in ETFs (Exchange Traded Funds), highlighting the need to consider factors such as asset management, expense ratio, tracking error, and liquidity. The speaker reviews top seven ETFs across various sectors, emphasizing the significance of strategic investing, especially during market fluctuations, to achieve higher returns. The analysis includes ETFs tracking indices like NIFTY 50, PSU, and Mid-cap 150, and provides insights into gold ETFs for portfolio diversification.

Takeaways

• 📈 Investing in ETFs is popular, but it requires careful consideration of various factors to avoid being unable to sell later due to lack of volume or trading.
• 🔍 When considering investing in an ETF, check its AUM (Assets Under Management), expense ratio, and tracking error to ensure it's a sound investment.
• 💡 Volume and liquidity are crucial for an ETF; without them, selling the investment could be challenging.
• 📊 The script discusses the importance of market timing, suggesting to invest more during market downturns for potentially higher returns.
• 🏆 The top seven ETFs from different sectors are mentioned, emphasizing passive investing strategies.
• 📝 NIFTY 50 ETFs that follow the NIFTY 50 index are highlighted, showing how they reflect market movements and offering historical returns data.
• 🏦 CPSE ETF (Central Public Sector Enterprises ETF) is discussed as a way to invest in a basket of 11 PSU companies, providing diversification.
• 📈 The script mentions the potential of mid-cap ETFs like NIFTY MIDCAP 150, comparing different funds and their performance.
• 🏦 PSU Bank ETFs are highlighted as a way to gain exposure to public sector banks, with an emphasis on the importance of volume and returns.
• 💼 IT ETFs like NIFTY IT ETF are compared, showing how they track the IT index and their historical performance.
• 🌟 Gold ETFs are presented as a portfolio diversification tool, comparing different gold ETFs and their returns, expense ratios, and liquidity.

Q & A

What are ETFs and why are they popular among investors?

ETFs, or Exchange-Traded Funds, are investment funds that are traded on stock exchanges, much like individual stocks. They are popular because they offer diversification, professional management, and are generally more cost-effective than mutual funds.

Why is it important to consider various factors before investing in ETFs?

Investing in ETFs requires considering factors such as the ETF's underlying assets, expense ratio, tracking error, and liquidity to ensure that the investment aligns with one's financial goals and risk tolerance.

What does the term 'volume' refer to in the context of ETFs?

Volume refers to the number of shares or contracts traded in an ETF during a given period. High volume indicates greater liquidity, which is important for investors as it allows for easier buying and selling of the ETF.

What is the significance of 'tracking error' in ETFs?

Tracking error measures the divergence of an ETF's performance from its benchmark index. A lower tracking error indicates that the ETF closely follows the index, which is desirable for investors seeking to replicate the index's performance.

What is the Nifty 50 ETF and how does it operate?

The Nifty 50 ETF is an index fund that tracks the Nifty 50 Index, which consists of 50 of the largest and most liquid Indian companies. It operates by mirroring the performance of the Nifty 50 Index, providing investors with exposure to a broad market segment.

Why should investors pay attention to the market conditions when investing in ETFs?

Market conditions can significantly impact an ETF's performance. For instance, during a market downturn, certain sectors may perform better than others. Being aware of market conditions can help investors make informed decisions about when to buy or sell ETFs.

What is the role of 'strategy' in investing in ETFs?

Investment strategy in ETFs can involve timing the market, such as buying more during market dips and holding during upswings. This approach can potentially lead to higher returns compared to a passive investment strategy.

What are some of the top sectors for ETF investments mentioned in the script?

The script mentions several sectors, including Nifty 50, PSU (Public Sector Undertaking) companies, mid-cap indices, and gold ETFs, as potential areas for ETF investment.

Can you explain the concept of 'liquidity' in ETFs?

Liquidity in ETFs refers to the ease with which an investor can buy or sell shares without affecting the market price. ETFs with high liquidity are more desirable as they allow for quick and cost-effective trading.

What is the significance of the 'expense ratio' in ETFs?

The expense ratio is the annual fee that all funds charge their shareholders. It is expressed as a percentage of the fund's average net assets. A lower expense ratio is generally more favorable as it means lower costs for the investor.

How do investors benefit from diversification when investing in ETFs?

Diversification in ETFs allows investors to spread their investments across various assets within a single fund, reducing the risk associated with investing in a single security. It provides exposure to a broader market or specific sector without the need to research and select individual stocks.