Types of funds
What is ETF?
An ETF is a fund, usually tracking an index or gold, whose units trade on the stock exchange like shares, at prices that change through the day.
How it works
You need a demat and trading account to buy or sell ETF units on the exchange. The price can sit slightly above or below the fund's indicative NAV, depending on demand and the market maker's activity.
Example
A gold ETF unit might trade at ₹116 when its indicative NAV is ₹115.80; you pay the market price plus brokerage.
Keep in mind
- Check how much the ETF trades each day; thinly traded ETFs can have wide price gaps.
- Fund of funds let you invest in ETFs without a demat account.
Questions people ask
Do I need a demat account for ETFs?
Yes, to trade on the exchange.
Are ETFs cheaper than index funds?
Their expense ratios are often lower, but brokerage and price gaps add to the cost.
Related terms
General information for education, not investment advice or a recommendation of any scheme. Mutual Fund investments are subject to market risks, read all scheme related documents carefully. Past performance may or may not be sustained in future. Last reviewed 25 October 2026.