Exchange Traded Fund

Exchange Traded Fund
ETF are a type of financial instrument whose unique advantage

over mutual funds have caught the eye of many an investor. An
ETF is a type offund whichowns the underlying assets (shares of
stock, bonds, oil futures, gold bars, foreign currency, etc.) and
divides ownership of those assets intoshares. The actual
investment vehicle structure (such as a corporation or
investment trust) will vary by country, and within one country
there can be multiple structures that co-exist. Shareholders do
not directly own or have any direct claim to the underlying
investments in the fund; rather theyindirectly own these assets.
ETF were introduced in US in 1993 and came to India around 2002.ETF is a
hybrid product that combines the features of an index mutual fund and stock
and hence is also called index shares. These funds are listed on the stock
exchanges and their prices are linked to the underlying index.
The Authorised participants act as market

makers for ETFs.
It can be bought and sold like any other
stock on an exchange.
It can be bought or sold any time during the
market hours at prices that are expected to
be closer to NAV at the end of the day.
There is no paper work involved for investing
in an ETF. These can be bought like any other
stock by just placing an order with a broker.
A security that tracks an index, a commodity or a basket

of assets like an index fund, but trades like a stock on
an exchange. ETFs experience price changes throughout
the day as they are bought and sold. Because it trades
like a stock, an ETF does not have its net asset value
(NAV) calculated every day like a mutual fund does. By
owning an ETF, you get the diversification of an index
fund as well as the ability to sell short, buy on margin
and purchase as little as one share. Another advantage
is that the expense ratios for most ETFs are lower than
those of the average mutual fund. When buying and
selling ETFs, you have to pay the same commission to
your broker that you'd pay on any regular order
A Great reason to consider ETF is

that they simply index and sector
investing in a way that is easy to
understand.If investors feel a
turnaround is around the corner they
can go long.
The first ETF in India, the NIFTY BEES (Nifty

Benchmark Exchange Traded Scheme) based on
Nifty 50 was launched inDecember 2001 by
Benchmark Mutual Fund. It is bought and sold like
any other stock on NSE and has all characteristics
of an index fund. As of March 2013, there were 35
ETFs listed on NSE. The ETF based on Sensex is
SPICE (SensexPrudential ICICI Exchange Traded
Fund) which was launched by -Prudential ICICI.
Growth in Gold ETFs have seen a rising trend as
shown in Following Figure however other ETFs have
seen a decline in activity from 2007 to 2011.
1 BANKBEES Bank Nifty Goldman Sachs Mutual Fund - Bank Nifty ETF 2
GOLDBEES Gold Goldman Sachs Mutual Fund - Gold ETF 3 GOLDSHARE Gold
UTI Mutual Fund - Gold ETF 4 JUNIORBEES Junior Nifty Goldman Sachs
Mutual Fund - Nifty Junior ETF 5 KOTAKGOLD Gold Kotak Mutual Fund - Gold
ETF 6 KOTAKPSUBK CNX PSU Bank Index Kotak Mutual Fund - PSU Bank
Index ETF 7 LIQUIDBEES Government Securities Goldman Sachs Mutual
Fund - Liquidbees ETF 8 NIFTYBEES Nifty Goldman Sachs Mutual Fund - Nifty
ETF 9 PSUBNKBEES CNX PSU Bank Index Goldman Sachs Mutual Fund - PSU
Bank ETF 10 QGOLDHALF Gold Quantum Mutual Fund - Gold ETF 11 QNIFTY
Nifty Quantum Mutual Fund - Nifty ETF 12 RELBANK Bank Nifty Reliance
Mutual Fund - Bank Nifty ETF 13 RELGOLD Gold Reliance Mutual Fund - Gold
ETF 14 SBIGETS Gold SBI Mutual Fund - Gold ETF 15 SHARIABEES Shariah
Index Goldman Sachs Mutual Fund - Shariah Index ETF 16 KOTAKNIFTY Nifty
Kotak Mutual Fund - Nifty ETF 17 HNGSNGBEES Hang seng Index Goldman
Sachs Mutual Fund - Hang Seng ETF 18 RELIGAREGO Gold Religare Mutual
Fund - Gold ETF 19 M50 Nifty Motilal Oswal Mutual Fund - Nifty ETF 20
HDFCMFGETF Gold HDFC Mutual Fund - HDFC Gold Exchange Traded Fund
In order to trade ETFs in India, investors need

demat/broking accounts and many Indian
investors do not have these accounts and
therefore do not consider ETFs. Banks play a
large role in the Indian financial markets and
are the biggest distributors. They find it
easier to sell open-end mutual funds that do
not require demat accounts. They also do not
want to be seen as selling stock market
products for the fear of additional regulation
and scrutiny.
ETF Example
Examples of Widely TradedETFs
One of the most widely known and traded ETFs tracks the S&P 500 Index, and is called the Spider
(SPDR), and trades under the ticker SPY.
The IWM trackes the Russell 2000 Index.
The QQQ tracks the Nasdaq 100, and the DIA tracks the Dow Jones Industrial Average.
Sector ETFs exist which track individual industries such as oil companies (OIH), energy companies (
XLE), financial companies (XLF), REITs (IYR), the biotech sector (BBH), and so on.
Commodity ETFs exist to track commodity prices including crude oil (USO), gold (GLD), silver (SLV
), and natural gas (UNG) among others.
ETFs that track foreign stock market indices exist for most developed and many emerging markets, as
well as other ETFs which track currency movements worldwide.
In india Following ETF are traded in

NSE.
S&P Cnx Nifty UTI National
Depository Recepits Scheme(Sunder)
Liquid Benchmark Exchange Traded
Scheme(Liquid BeES)
Junior Nifty BeES
Nifty BeES
Bank BeES
REITS ( Real Estate Investments

Trusts)
A Real Estate Investment Trust is a
trust that pools resources by offering
units to the investors. Such funds
are used to acquire and manage
income producing properties and
income generated from such
properties is distributed to investors.
REIT receive special tax
considerations and are characterized
by lower transaction costs.
REITs allow anyone to invest in

portfolios of large-scale properties
the same way they invest in other
industries through the purchase of
stock. In the same way shareholders
benefit by owning stocks in other
corporations, the stockholders of a
REIT earn a share of the income
produced through real estate
investment without actually having
most REITs are traded on

major stock exchanges, but there are also
public non-listedandprivateREITs. The
two main types of REITs areEquity REITs
andMortgage REITs. Equity REITs generate
income through the collection of rent on,
and from sales of, the properties they own
for the long-term. Mortgage REITs invest in
mortgages or mortgage securities tied to
commercial and/or residential properties.
Today, REITs are tied to almost all

aspects of the economy, including
apartments, hospitals, hotels,
industrial facilities, infrastructure,
nursing homes, offices, shopping
malls, storage centers, student
housing,
REITs offer investors a number of benefits, including:

Diversification: Over the long term, Equity REIT returns
have shown little correlation to the returns of the broader
stock market.
Dividends: Stock exchange-listed REITs have provided a
stable income stream to investors.
Liquidity: Stock exchange-listed REIT shares can be easily
bought and sold.
Performance: Over most long-term horizons, stock
exchange-listed REIT returns outperformed the S&P 500, Dow
Jones Industrials and NASDAQ Composite.
Transparency: Stock exchange-listed REITs operate under the
same rules as other public companies for securities regulatory
and financial reporting purposes.
REIT Concept introduced in 1960 In USA. Through a

legislation authorizing REITs passed by the congress.
Benefits of REIT
For the investors: It is an investment class provide
the common man an opportunity to invest in fixed
income securities which also provide long term
capital appreciation and a natural inflation hedge. It
also opens to small investors an arena ( i.e rent
generating real estate assets) which was hitherto
the monopoly of large investors.
For the industry: REITs assist in

streamlining the real estate by
creating a new and transparent
source of raising finance in the real
estate sector.Further REIT can
provide developers with institutional
capital to sell their assets and use
funds to repay banks and /or utlize
the funds for more development.
Real Estates
One way of investing in real estate is
by buying a home. The value of a
home change over time , in response
to supply and demand. When the
demand for homes increase in your
area , home values tend to rise. The
return that you earn on your home is
difficult to measure because you
must take into account the
financing ,real estate agent
Gold and Bullion

Bullionis the pure form of a precious metal such as gold, silver, copper, or platinum,
from which coin metal alloys are made.Gold and silver that is officially recognized as
being at least 99.5% pure and is in the form of bars or ingots rather than coins. To create
bullion, gold first must be discovered by mining companies and removed from the earth
in the form of gold ore, a combination of gold and mineralized rock. The gold is then
extracted from the ore with the use of chemicals or extreme heat. The resulting pure
bullion is also called "parted bullion." Bullion that contains more than one type of metal is
called "unparted bullion."
EXPLAINS 'Bullion'
The price of gold bullion is influenced by demand from companies that use gold to make
jewelry and other products, and by perceptions of the overall economy (for example,
gold becomes more popular as an investment during times of economic instability).
Central banks and investors who hold gold typically do so in the form of bullion, but it is
expensive to store and insure. Bullion is traded in the bullion market, which is primarily
an OTC market open 24 hours a day. Trade volume in the bullion market is high, and most
transactions are completed electronically or by phone.

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Exchange Traded Fund

ETF are a type of financial instrument whose unique advantage

The Authorised participants act as market

A security that tracks an index, a commodity or a basket

A Great reason to consider ETF is

The first ETF in India, the NIFTY BEES (Nifty

In order to trade ETFs in India, investors need

In india Following ETF are traded in

REITS ( Real Estate Investments

REITs allow anyone to invest in

most REITs are traded on

Today, REITs are tied to almost all

REITs offer investors a number of benefits, including:

REIT Concept introduced in 1960 In USA. Through a

For the industry: REITs assist in

Gold and Bullion

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