Exchange-traded funds (ETFs)
- ETFs are Index Funds
- An ETF is a basket of stocks that reflects the composition of an Index, like S&P CNX Nifty or BSE Sensex.
- They are listed and traded on exchanges like stocks.
- They enable investors to gain broad exposure to entire stock markets in different Countries and specific sectors with relative ease, on a real-time basis and at a lower cost than many other forms of investing.
- ETFs trading value is based on the net asset value of the underlying stocks that it represents
- They are similar to mutual funds in a certain manner but are more liquid as they can be sold quickly on stock exchanges like shares.
Why in news?
- Finance Ministry has launched Bharat 22, an ETF. Bharat 22 comprise of 22 stocks including those of central public sector enterprises (CPSEs), public sector banks (PSBs) and its holdings under the Specified Undertaking of Unit Trust of India (SUUTI). It will help to speed up Government’s disinvestment programme budgeted to raise a record Rs 72,500 crore in the FY 2018.