Everything About Investing In ETFs: 10 Key Takeaways

2 minutes read

Swarup Mohanty, CEO of Mirae Asset Management is not a very big fan of tax breaks to propel an investment solution. For him, an investment solution comes on the basis of its merit and the possibility of wealth creation that it has to offer.

Mohanty featured on the latest episode of Winvesta Insights – the new season of podcasts of Winvesta. He also elaborated on why the ETF market in India has taken time to grow the way it has over the last five years. Assets Under Management (AUM) of Indian ETFs have risen 8x over the last five years to INR 4 Lakh Crore.

“The primary reason is that India is still a great market for alpha generation. The shift to ETFs happens when the alpha generation ability of the market starts to diminish. We are on that cusp. While we still have a lot of talent in India which can generate alpha, the list is definitely shrinking,” he said.

Here are 10 key takeaways from that interaction:

  • You need a Demat account to buy ETFs unlike Mutual Funds
  • The higher the tracking error, the higher is the inefficiency of the fund to replicate the index in the correct manner
  • The cost of the ETF is lower than a mutual fund. But that should not be the deciding factor to invest in it.
  • ETFs are cost-efficient but fund houses will bring their own ideas for an ETF and there will be a price for that ideation.
  • India is still a market with great alpha generation opportunities
  • The switch to ETFs happens when the alpha generation ability of the market starts to diminish
  • There is no cause of concern for existing overseas investors but new purchases will have to wait for some time.
  • For a first-time investor, the ideal way to invest is through the ETF route as the person will take time to understand the working of the market
  • Your goal should determine when to exit your holdings, not the market
  • One should not wait for a tax break to make an investment decision

To listen to the entire episode, click here. The Winvesta Insights Podcast is available on multiple platforms like Apple Podcasts, Google Podcasts, Spotify, Anchor, Radio Public, Breaker, among others.

Access 4500+ US Stocks and ETFs with Winvesta

Get an account in minutes and start investing as soon as today

All content provided by Winvesta India Technologies Ltd. is for informational and educational purposes only and is not meant to represent trade or investment recommendations. Remember capital is at risk. Terms & Conditions apply. 

Hormaz Fatakia

Contributed by Hormaz Fatakia

Hormaz is the Financial Content Lead at Winvesta. Before Winvesta, Hormaz worked at Bloomberg Quint where he was a senior writer.

Related Posts

Why You Must Consider Investing in Foreign Stocks Now?

In these challenging times of lockdown and quarantine, everything around us is at a literal standstill, including our stock market. It’s not a surprise that the Indian markets are currently witnessing massive volatility due to the Covid-19 pandemic. Many of us now wish they had diversified their portfolio, or are looking for efficient ways to diversify it now.

Why is Portfolio Diversification Important?

Diversification is an investment strategy that recommends owning several investments that tend to perform well at different times to reduce the effects of market fluctuations. In simple terms, don’t put all your eggs in one basket. But then how do you choose different baskets?

Why Big Tech Needs to be a Part of Every Indian Portfolio

Rukesh Reddy, Director of Digital Transformation at Citibank in New York, talks about why every investor needs to lean heavy on software companies while building an investment portfolio.