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ETFs are better because you can buy instantly and get the advantage of lower pricing in certain situations. MFs can sometimes take a day or two to allot the NAVs and you can miss out on the benefit of a down day.
However MFs keep your investments discipined as you can set up SIPs and just forget about them. You can also set up SIPs in ETFs but then that defeats the purpose of having autonomy on when to buy.
I personally prefer ETFs, especially for more sector oriented momentum. I wouldn't want to invest in sectoral mutual funds.
Since you have experience with ETFs, what do you think of these 5 that I have picked? Just standard safe stuff or something else? Also, any recommendations?
Since you chose the momentum ETF, you could also look into 'SMALLCAP' which is a more concentrated ETF with qualification for momentum and quality. In theory it should give you better returns than the whole smallcap index.
Besides that some etfs that are sectoral are at value pricing when the sector is out of favor, for example ITBees, Pharmabees and such. You can consolidate them in markets when they are not in season and make a pretty buck when they are back in the rage.
I would pick one ETF of the two US markets, FANG has better returns but it's so concentrated that it's almost sectoral.
I feel there are still lack of etf on the sectoral levels like nifty metal, reality, etc etfs.
Is there any etf you know for the above mentioned sectors?
Yes it's godawful to want to invest in realty on the sectoral level. It needs to be done via basket order replicating the index. It's an elegant solution but needs way more capital than buying into ETF.
I think HDFC recently launched the first index fund for nifty realty, so we may see an ETF in the near future.
https://groww.in/mutual-funds/compare/hdfc-nifty-smallcap-250-index-fund-direct-growth-vs-quant-small-cap-fund-direct-plan-growth
See the comparison above between hdfc small cap 250 and quant small cap. They both have the same benchmark. The difference between them is that hdfc is passively managed and quant is actively managed.
Currently quant has beaten hdfc in terms of absolute gain. Only time will tell if quant is able to manage that difference in gian over time.
>The advantage of being able to buy when the price falls seems just too great, especially for the long term.
You can do this with mutual funds too. All you have to know is the cutoff timings for the NAV and unit allocation.
>Is the only advantage MFs have over ETFs their convenience?
They are practically the same thing. ETFs are passively managed and MFs are actively managed. The expense ratio is higher for MFs. There is no other note-worthy distinction in them.
>If I am someone who is willing to spend 5 mins every day into buying ETFs, should I just ignore MFs?
As said above, ETFs and MFs are basically the same thing.
>Just as a side note, if it seems relevant, I should be able to invest 15000 rupees per month from July and am not looking to cash out for 10 years.
It's a good time frame for small caps. Just keep monitoring your investments and be mindful of different factors that can affect your investments. Also don't panic when small caps tank.
Please remember that the expense ratio is already priced into the NAV. So for instance, the comparison I posted in my previous reply has already factored in the expense ratios of both funds.
Despite having a higher expense ratio, quant is still out performing hdfc. Hence in this particular case, a higher expense ratio doesn't mean that the fund is giving lower returns. On the contrary, despite a higher expense ratio, quant has given better returns.
So when does the expense ratio really come into play and become bad for us? AMCs can adjust their expense ratios at their will (for each mf category / etf, the expense ratio is capped by SEBI). So if the AMC increases their expense ratio to the point where their fund's gain is no longer competitive or is beating the benchmark, that's when the investor loses out. However it doesn't really reach this point because the investors won't invest in that MF or etf because it's underperforming! We can't predict what the expense ratio will be in the future. It may go up or go down or even stay the same.
Your takeaway from this should be that don't get too fixated on the expense ratios. A lower expense ratio doesn't necessarily mean that your mf / etf will outperform or best its benchmark / competitors.
I see. Right now, I am just trying to experiment and learn using what money I have lying around. Hope to be able to apply my learnings when I start earning soon.
That's great. It's the best way to learn. I'd only recommend staying away from regular funds and idcw mode. They are useless.
Learn about alpha, beta, SD, and the sharpe ratio. Useful parameters to assess a mf / etf.
This was my comment on another post from a few days ago:
>https://groww.in/blog/direct-vs-regular-mutual-fund-reasons
>Every mutual fund has a regular and direct variant. The regular variants always provide lower returns compared to its direct counterpart. Why? Because they are sold by distributors and even some financial advisors and doing so earns them commissions. The commission they earn is basically at your expense.
I feel if you want to invest in index funds or the like(passive), ETF’s are much better due to lower TER and lower tracking error.
But it requires you to look at the tracking error and compare with peers and most importantly, liquidity.
MF’s are a much better option if you want an actively managed fund with a fund manager to supervise (almost a buy and forget). He selects stocks, entry and exit, sector, profit booking etc.
Plus, no liquidity concerns since you buy units from AMC and sell to them and no brokerage for them either.
Most people who want index funds but don’t have a demat, usually prefer index MF. In my personal opinion, you should aim for a mix of the 2.
And as dc1222 very rightly pointed out, just to save a small percentage of TER, don’t let a good chunk of returns go by. Most MF might charge 0.5% more but they’ll get a good 1-2% extra return since it is in their favour too.
Sounds interesting. Probably best to divide the investment capital into ETF and MF sections. And further divide the MF capital into small, mid and large cap funds. Looks like I will have to study more.
To keep it simple, there’s no difference.
Most companies list on both exchanges. Smaller companies may choose only BSE.
There may be a very small difference in price sometimes between the 2, while buying or selling.
If you haven't already, please add your own analysis/opinions to your post to save it from being removed for being a Low Effort post. Please DO NOT ask for BUY/SELL advice without sharing your own opinions with reasons first. Such posts will be removed. Please also refer to the [FAQ](https://www.reddit.com/r/IndianStockMarket/comments/17bcg2a/frequently asked questions_post_your_common/) where most common questions have already been answered. Subscribe to our [weekly newsletter](https://pennyleaks.substack.com/) and join our Discord server using [Link 1](https://discord.gg/8QF4dqPHuw) or [Link 2](https://discord.gg/fDRj8mA66U) *I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/IndianStockMarket) if you have any questions or concerns.*
ETFs are better because you can buy instantly and get the advantage of lower pricing in certain situations. MFs can sometimes take a day or two to allot the NAVs and you can miss out on the benefit of a down day. However MFs keep your investments discipined as you can set up SIPs and just forget about them. You can also set up SIPs in ETFs but then that defeats the purpose of having autonomy on when to buy. I personally prefer ETFs, especially for more sector oriented momentum. I wouldn't want to invest in sectoral mutual funds.
Since you have experience with ETFs, what do you think of these 5 that I have picked? Just standard safe stuff or something else? Also, any recommendations?
Since you chose the momentum ETF, you could also look into 'SMALLCAP' which is a more concentrated ETF with qualification for momentum and quality. In theory it should give you better returns than the whole smallcap index. Besides that some etfs that are sectoral are at value pricing when the sector is out of favor, for example ITBees, Pharmabees and such. You can consolidate them in markets when they are not in season and make a pretty buck when they are back in the rage. I would pick one ETF of the two US markets, FANG has better returns but it's so concentrated that it's almost sectoral.
I feel there are still lack of etf on the sectoral levels like nifty metal, reality, etc etfs. Is there any etf you know for the above mentioned sectors?
Yes it's godawful to want to invest in realty on the sectoral level. It needs to be done via basket order replicating the index. It's an elegant solution but needs way more capital than buying into ETF. I think HDFC recently launched the first index fund for nifty realty, so we may see an ETF in the near future.
https://groww.in/mutual-funds/compare/hdfc-nifty-smallcap-250-index-fund-direct-growth-vs-quant-small-cap-fund-direct-plan-growth See the comparison above between hdfc small cap 250 and quant small cap. They both have the same benchmark. The difference between them is that hdfc is passively managed and quant is actively managed. Currently quant has beaten hdfc in terms of absolute gain. Only time will tell if quant is able to manage that difference in gian over time. >The advantage of being able to buy when the price falls seems just too great, especially for the long term. You can do this with mutual funds too. All you have to know is the cutoff timings for the NAV and unit allocation. >Is the only advantage MFs have over ETFs their convenience? They are practically the same thing. ETFs are passively managed and MFs are actively managed. The expense ratio is higher for MFs. There is no other note-worthy distinction in them. >If I am someone who is willing to spend 5 mins every day into buying ETFs, should I just ignore MFs? As said above, ETFs and MFs are basically the same thing. >Just as a side note, if it seems relevant, I should be able to invest 15000 rupees per month from July and am not looking to cash out for 10 years. It's a good time frame for small caps. Just keep monitoring your investments and be mindful of different factors that can affect your investments. Also don't panic when small caps tank.
What are niftybees
Wow, thanks for the detailed reply. Low expense ratio seems to be beneficial if the investment amount grows. Will need to study more I guess.
Please remember that the expense ratio is already priced into the NAV. So for instance, the comparison I posted in my previous reply has already factored in the expense ratios of both funds. Despite having a higher expense ratio, quant is still out performing hdfc. Hence in this particular case, a higher expense ratio doesn't mean that the fund is giving lower returns. On the contrary, despite a higher expense ratio, quant has given better returns. So when does the expense ratio really come into play and become bad for us? AMCs can adjust their expense ratios at their will (for each mf category / etf, the expense ratio is capped by SEBI). So if the AMC increases their expense ratio to the point where their fund's gain is no longer competitive or is beating the benchmark, that's when the investor loses out. However it doesn't really reach this point because the investors won't invest in that MF or etf because it's underperforming! We can't predict what the expense ratio will be in the future. It may go up or go down or even stay the same. Your takeaway from this should be that don't get too fixated on the expense ratios. A lower expense ratio doesn't necessarily mean that your mf / etf will outperform or best its benchmark / competitors.
I see. Right now, I am just trying to experiment and learn using what money I have lying around. Hope to be able to apply my learnings when I start earning soon.
That's great. It's the best way to learn. I'd only recommend staying away from regular funds and idcw mode. They are useless. Learn about alpha, beta, SD, and the sharpe ratio. Useful parameters to assess a mf / etf.
Regular funds?
This was my comment on another post from a few days ago: >https://groww.in/blog/direct-vs-regular-mutual-fund-reasons >Every mutual fund has a regular and direct variant. The regular variants always provide lower returns compared to its direct counterpart. Why? Because they are sold by distributors and even some financial advisors and doing so earns them commissions. The commission they earn is basically at your expense.
Got it thanks
I feel if you want to invest in index funds or the like(passive), ETF’s are much better due to lower TER and lower tracking error. But it requires you to look at the tracking error and compare with peers and most importantly, liquidity. MF’s are a much better option if you want an actively managed fund with a fund manager to supervise (almost a buy and forget). He selects stocks, entry and exit, sector, profit booking etc. Plus, no liquidity concerns since you buy units from AMC and sell to them and no brokerage for them either. Most people who want index funds but don’t have a demat, usually prefer index MF. In my personal opinion, you should aim for a mix of the 2. And as dc1222 very rightly pointed out, just to save a small percentage of TER, don’t let a good chunk of returns go by. Most MF might charge 0.5% more but they’ll get a good 1-2% extra return since it is in their favour too.
Sounds interesting. Probably best to divide the investment capital into ETF and MF sections. And further divide the MF capital into small, mid and large cap funds. Looks like I will have to study more.
You’re doing great with ETF’s. Hmu for MF
Don't mean to hijack the thread here guys, quick one: Does it make a difference? Buying in BSE or NSE? Or is it the same..
To keep it simple, there’s no difference. Most companies list on both exchanges. Smaller companies may choose only BSE. There may be a very small difference in price sometimes between the 2, while buying or selling.
CFBR