It is essential for investors to make the most of the many investment opportunities available in the market. However, investors need to be effective in financial planning to ensure that they invest in the right scheme. We are all emotionally attached to our financial goals, which is why we want to make everything work so that we can achieve those goals. Financial planning helps investors prioritize their financial goals, so that they can create an effective investment plan.

There are many investment schemes to choose from, but each scheme has a different risk profile. That is why retail investors are advised to determine their risk appetite. Investors who are completely reluctant to take risks with their finances can choose avenues that offer fixed interest rates which are generally low. However, if you are young, looking to invest in market linked schemes and willing to take a slightly aggressive approach to your investment portfolio, they can consider investing in mutual funds.

Mutual funds are slowly catching the attention of Indian investors due to several reasons. They hold a diversified portfolio, invest across multiple asset classes, offer active risk management and also have the potential to offer investors capital appreciation over the long term. Mutual funds invest in various assets such as equities, government bonds, corporate securities, certificates of deposits, treasury bills, etc. Mutual fund investors are called unit holders. A mutual fund investor is allotted mutual fund units along with the investment amount and on the basis of the current net asset value (NAV) of the fund. Whether a mutual fund is able to meet its underlying benchmark will depend entirely on the performance of its underlying assets and the industries/sectors/economies in which they invest.

what are exchange traded funds,

Mutual funds are further classified on the basis of their unique features such as investment objective, investment strategy, asset allocation etc. This distinction between mutual funds exists so that investors can diversify their mutual fund portfolios based on their risk appetite rather than keeping all their eggs in one. basket. Some of the major mutual fund categories include Equity, Debt, Hybrid, Solution Oriented, Gold, Index and ETF (Exchange Traded Fund).

The Securities and Exchange Board of India (SEBI), the regulator of securities and commodities in India, has described Exchange Traded Funds as – ‘
An open ended scheme that replicates/tracks a specified index. Out of the total assets, the fund should invest a minimum of 95 per cent in securities of a particular index (that is being replicated or tracked).,

To put it simply, an Exchange Traded Fund (ETF) follows a particular benchmark/index, for example, Nifty 100. Unlike actively managed funds. Exchange traded funds do not involve the active participation of the fund manager. Conversely, unlike an index fund, ETFs are marketable securities that can be bought/sold and traded throughout the day on an exchange, just like the stock of any other company. Another thing that differentiates an ETF from a mutual fund is that it does not have a net asset value or NAV like a mutual fund. Like an equity share, one unit of an ETF is equal to one share of its underlying index.

Requirements to get started ETF Investment

There are many ways in which you can invest in Exchange Traded Funds. However, investors should keep the following points in mind while considering investing in Exchange Traded Funds:

• They need to open a trading account through a broker or their bank
• They need to open a Demat (Dematerialization) account to park their Exchange Traded Fund units.
• For opening a trading and demat account, a person has to file a KYC complaint. If they have not yet completed their KYC (Know Your Customer) formalities, they need to do the mandatory KYC process once.
• Once you have completed all the above mandatory formalities, you can start buying/selling ETFs.

An investor can invest in Exchange Traded Funds in three ways:

1. Investors can buy/sell ETF units by placing orders online through any trading app.
2. Another way to buy/sell ETFs is to place your order by calling your broker and informing him about your trading objectives in person. It is mandatory for the investors to check whether the broker is registered with SEBI or not.
3. The third and final way to invest in ETFs is by placing orders through online trading websites.

“This is an investor education and awareness initiative by Axis Mutual Fund. Investors need to complete a one-time KYC process. For more details visit www.axismf.com or contact us at [email protected]. Investors should only Should deal with registered mutual funds, details of which are available at www.sebi.gov.in – INTERMEDIARIES/MARKET INFRASTRUCTURE INSTITUTIONS section. For any grievance redressal, investors may call us at 1800 221 322 or write to us at customerservice@ axismf.com or register a complaint on SEBI SCORE portal. https://scores.gov.in,

Mutual Fund investments are subject to market risks, read all scheme documents carefully.