ETFs to Invest in India for Decent Returns


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Lately, Mutual funds are garnering all the hype. However, they are growing older and outdated now, to be replaced by Exchange Traded Funds or ETFs – considered to be the most innovative and popular securities among investors in India.

With more and more investors looking at ETFs as a viable option of investment in India, it is worth paying attention to some of the best performing ETFs.

But, before we go to the list of the top performers, let’s look at the benefits of investing in ETFs.

Types of ETFs

There are various types of ETFs that are available to investors that can be used for the generation of income, price increases, speculation, and to hedge or partly offset risk in an investor’s portfolio. Some of these types are:

  • Stock ETFs

Stock ETF comprises a basket of stocks to track a single industry or sector. For instance, a stock ETF can track automotive or foreign stocks. The motive is to provide diversified exposure to a single industry, that includes high performers and new entrants with potential for growth.

  • Bond ETFs

This type of ETF is used to provide a regular income to investors. Their income distribution is dependent on the performance of underlying bonds. They might comprise corporate bonds, government bonds, and state and local bonds known as municipal bonds. Bond ETFs do not have a maturity date, unlike their underlying instrument. They generally trade at a premium or discount from the actual bond price.

  • Commodity ETFs

As the name suggests, commodity ETFs invest in commodities that include crude oil, or gold. It provides several benefits like diversifying the portfolio, making it easier to hedge downturns, and holding shares in a commodity ETF is cheaper than physical possession of the commodity. This is because the former does not involve insurance and storage costs.

  • Industry ETFs

Sector ETFs or Industry ETFs, are funds that are in a specific sector or industry. Industry ETFs gain exposure to the upside of that industry by tracking the performance of companies operating in that sector.

Benefits of Investing in ETFs

  • Low cost: the expense ratio of an ETF is usually less than 0.5% compared to 2-2.5% for actively managed equity funds.
  • Liquidity factor: ETFs are marketable securities and therefore can be traded on registered bourses. Since they can be bought and sold at any time (within trading hours), it is considered to be a lot more liquid compared to other investment products like Mutual funds or PPFs.
  • Diverse products: ETFs in India track diverse products like Nifty, Gold, Nifty Next 50, Nifty Low Vol 20 Index and many more.

List of well-performing ETFs

In the wake of how good investing in ETFs can be, here is a list of ETFs that are doing well in 2021

  • UTI Sensex ETF
  • Canara Robeco Gold ETF
  • Motilal Oswal Nasdaq 100 ETF
  • Reliance ETF Liquid BeES
  • Nippon ETF Bank BeES
  • SBI – ETF Gold
  • Quantum Gold fund
  • LIC MF ETF – Sensex
  • Kotak Sensex ETF
  • Invesco India Nifty ETF

You can learn more about ETFs here.

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