Exchange-Traded Funds, or ETFs, are traded on stock exchanges just like individual stocks. They let you buy and sell shares during regular trading hours and give you real-time prices. Investors can buy ETFs with the same brokerage accounts and trading platforms they use to buy stocks, and the fees are the same. This makes them a popular way to invest because they offer the best of both worlds. Alice Blue makes this process seamless and intuitive.
Content :
- How To Buy ETF Funds?
- ETF Vs Mutual Fund
- Best ETF In India
- How To Buy ETF – Quick Summary
- How To Buy ETF- FAQs
Here’s a step-by-step guide to buying ETFs via Alice Blue:
- Open a Demat and trading account with Alice Blue. If you already have an account, log in.
- Visit the trading section of the platform.
- Identify the ETF you want to invest in. You can do this by typing the ETF’s name or ticker symbol in the search bar.
- Once you’ve found the ETF, click on the ‘Buy’ button.
- Enter the number of units you want to buy.
- Review your order carefully, and if everything is correct, confirm your purchase.
How To Buy ETF Funds?
Purchasing ETFs, much like any other market-traded security, involves a series of well-defined steps. To start, an investor must have a Demat account, which can be opened with any brokerage firm, such as Alice Blue.
- Log into your brokerage account.
- Navigate to the trading platform.
- Use the search function to find the ETF you want to purchase by its ticker symbol.
- Click on ‘Buy’ and specify the number of units or the amount of money you want to invest.
- Confirm your order and wait for it to be executed.
Take, for example, Nippon India ETF Nifty BeES (NIFTYBEES), one of the first ETFs in India that replicates the Nifty 50 Index. To purchase it, you need to log in to your Alice Blue account, search for NIFTYBEES in the trading platform, decide on the number of units you want to buy, place your order, and wait for it to be executed during market hours.
ETF Vs Mutual Fund
The primary difference between an ETF vs Mutual Fund is that ETFs trade like stocks, meaning they can be bought and sold throughout the day at fluctuating market prices. In contrast, mutual funds are bought and sold at the day’s closing net asset value (NAV), regardless of when the order was placed.
| Parameter | ETFs | Mutual Funds |
| Trading | Trade throughout the day at market prices like stocks. | Bought and sold at the day’s closing net asset value (NAV). |
| Investment Strategy | Passive, usually tracking an index. | Can be active (managed by a fund manager) or passive. |
| Management Costs | Lower due to passive management. | Higher for active funds due to management costs. |
| Minimum Investment | One share | Varies by the fund, usually higher. |
| Liquidity | High – bought and sold like stocks. | Depends on fund redemption policies. |
| Transparency | Holdings are visible daily. | Holdings are typically disclosed monthly or quarterly. |
| Dividend Reinvestment | Depends on the specific ETF policy. | Automatic in most cases unless opted for dividend payout. |
Best ETF In India
| ETF | Return (1 year) | Return (3 years) | Return (5 years) |
| Nippon India ETF Nifty 50 | 12.43% | 14.05% | 19.82% |
| HDFC Sensex ETF | 12.05% | 13.19% | 18.22% |
| SBI ETF Sensex | 11.73% | 12.64% | 17.48% |
| Motilal Oswal NASDAQ 100 ETF | 10.94% | 14.85% | 21.53% |
| ICICI Prudential Nifty Next 50 ETF | 10.58% | 12.32% | 17.04% |
In the past year, ETFs have outperformed the market, with some funds delivering returns of over 12%. However, over the past 3 and 5 years, the returns on ETFs have been more muted, with some funds delivering returns of just over 10%.
We hope that you are clear about the topic. But there is more to learn and explore when it comes to the stock market, and hence we bring you the important topics and areas that you should know:
How To Buy ETF – Quick Summary
- Buying an ETF involves steps similar to buying stocks, including account setup, identification of the ETF, and execution of the purchase order.
- To buy ETFs, one must have a Demat account, and purchases can be made using brokerage platforms like Alice Blue.
- ETFs and mutual funds, while both being investment pools, differ in trading mechanisms, management costs, transparency, and more.
- Stocks represent shares in individual companies, while ETFs are funds owning diversified assets and trading on exchanges.
- Invest in ETFs at Zero Cost with Alice Blue.
How To Buy ETF- FAQs
- Open a Demat and trading account.
- Identify the desired ETF.
- Place a buy order.
- Confirm and execute the order.
Yes, buying an ETF is similar to buying stocks. You can purchase them on your own, given you have a Demat and a trading account. Using the trading platform, you can choose the ETF you wish to buy, place an order, and execute the transaction.
The minimum investment for buying an ETF is typically the cost of one share. ETFs, like stocks, are traded in units, and the price of a single unit depends on its market value at the time of purchase. Unlike mutual funds, ETFs do not have a predefined minimum investment requirement.
Yes, ETFs can be sold quite easily because they trade on stock exchanges just like individual stocks. However, the ease of selling also depends on the liquidity of the particular ETF. ETFs that are more widely traded can generally be sold more easily.
ETFs can be an excellent investment for various types of investors due to their lower costs, liquidity, and diversification benefits. However, like any investment, they come with risks. It’s important to understand the investment strategy of the ETF, its holdings, and how it fits into your overall investment portfolio before investing.
Yes, most ETFs do pay dividends to their investors. The dividends are usually paid from the income received by the ETF from the underlying assets it holds. Investors can choose to receive these dividends as cash payouts or have them automatically reinvested back into the ETF, depending on the ETF’s policy and the investor’s preference.
