Exchange-traded funds, or ETFs, are very similar to mutual funds because both are benchmarked against the same underlying indices. Though both looks similar in nature there are many differences.
Looking at the above points it may sound like ETFs are the clear winner but let us consider those points from mutual funds point of view as well.
So the biggest advantage of investing in ETF is you can use the intraday volatility to invest at a much better price when compared to mutual funds which are available only at the close NAV price.
So let us create a sample portfolio in ValueResearchOnline to compare a mutual funds with ETFs.
HDFC Index Nifty Fund and HDFC Nifty ETF purchase date are 16Dec2015. Kotak 40 Regular Growth Fund and Kotak Nifty ETF purchase date are 15Dec2011.
Kotak 40 Regular Growth Fund and Kotak Nifty ETF purchase date as 16Dec2015.
My observations are based on small set of data but here is what my observations are:
Investing for the short term for an year or so ETF may be a better but for the long term, mutual funds can outperform even when compared to regular plan over direct plan.
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