Equity ETF Compare

Additional Useful Information

• An investor can buy “Units” of these ETFs. These units can be purchased at a price which is called the “Net Asset Value or NAV”. The NAV of these funds keeps changing daily depending upon the changes in the stock prices of the companies that are held by them.

• The investors can sell these units anytime at the NAV price prevailing on the day of the sale.

• Total Purchase Amount	=	Number of Units X NAV as on the day of purchase
  Total Sale Amount	=	Number of Units X NAV as on the day of sale
  Total Gain	=	Total Sale Amount – Total Purchase Amount

• Unlike Mutual Funds, ETFs do not attract any exit load since investors sell their ETF units to other investors in the market.

• Equity ETFs are considered a good investment option over the long term (more than 5 years). 

Returns *

• Equity ETFs do not guarantee any returns, they are subject to market risk.

• If Equity ETFs are held over a 5-year period, they could generate returns ranging from 15.5% to 17.5% per year.

Risk Level

• Equity ETFs are categorized as high-risk investments since they invest in the equity market.

• The risk also depends on the index being tracked. For example, a small cap ETF will be riskier than a large cap ETF.

Liquidity

• When an investor sells or redeems units of ETFs, the sale amount will be received by the investor in 2 working days (T+2).

• However, sometimes there may not be sufficient liquidity to sell off all holdings. This makes the equity ETFs typically liquid, but not always liquid.

Interesting Facts

• Equity ETFs are passive investments. They do not try to outperform market returns. They simply track the index and mirror its characteristics, unlike mutual funds (Except Index Funds), that try to outperform market returns.

• ETFs do not have any manager-based risk, like in mutual funds. Since they track an index, ETF managers do not have to take risks that help them outperform the market.

• ETFs have lower transaction costs as compared to mutual funds. In other words, they are more cost efficient as compared to mutual funds.

Tax Implications

• Earnings received from Equity ETFs are taxable.

• When investors sell their Equity ETF units, the difference between the Sale Amount and Purchase Amount is typically called “Capital Gain” or “Capital Loss” (if sale amount is lesser than the purchase amount).

• The tax that the investor must pay on Capital Gain is –
• Situation 1 – If the Equity ETFs are sold within a period of a year from investment, the Capital Gains earned (called Short Term Capital Gains) are taxed at 20% of the gain.
• Situation 2 - If the Equity ETFs are sold after a period of 1 year from investment, the Capital Gains earned (called Long Term Capital Gains) are taxed at 12.5% of the gain.

• There is no tax in case of “Capital Loss”.

• For any dividends/payouts received by investors from Equity ETFs, these amounts are added to their total taxable income and tax is required to be paid as per the tax slab.

Where To Invest

• https://www.axismf.com/mutual-funds/equity-funds/axis-equity-etfs-fof/et-dg/direct

• https://www.5paisa.com/etf/equity-etf