An Exchange traded fund (ETF) is an investment fund traded on stock exchanges.
Most of the ETFs are index based.This concept launched at USA in 1989 in the form of index funds.But,now ETFs are also available with commodity,currency and bonds.
India's first ETF Niftybees listed on National stock exchange in 2002.This is based on Nifty 50 index.
Now,Sector index based ETFs ,Gold ETFs and Liquid fund ETFs are also popular in Indian stock market. Prices of Exchange traded funds are liquid and transparent like stocks.It provides diversification like a mutual fund and real time price and intraday trading opportunity as in a share.
An Investors can hold it in demat account.There is zero long term Capital gain tax.
Unit price of Gold ETFs represent the one gram price of gold .Investor can gain from rising gold price and avoid the expenses such as making charges.He can also save the cost of securities transaction tax and wealth tax. Major ETFS in India are the following:
Gold ETFs - GoldBees,GoldShare,RelGold,KotakGold, IdbiGold etc.
Index based ETFs - NiftyBees,JuniorBees,IiflNift,BankBees,SPICE,M100,KotakSensexETF
Shariah index ETF - Shariabees
Liquid fund ETF - LiquidBees
International ETF - HangsengBees.