8 Best ETFs Of 2024
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An ETF stands for an exchange-traded fund, a passively managed investment instrument that trades on a stock exchange. It tracks or mirrors market indices or sectors such as equities, commodities, fixed income, and currencies.
When you purchase an ETF, you get exposure to a wide range of securities without buying individual stocks separately. They can be bought or sold during trading hours or take a long-term investment approach.
Here’s a list of the top ETFs to consider in India.
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- Best ETFs of 2024
- Tata Nifty Private Bank ETF
- SBI Nifty Private Bank ETF (SBIETFPB)
- Axis Nifty Bank ETF (AXISBNKETF)
- Kotak Nifty Bank ETF (BANKNIFTY1)
- HDFC NIFTY Bank ETF (HDFCNIFBAN)
- Nippon India ETF Nifty Bank BeES (BANKBEES)
- HDFC Gold ETF (HDFCGOLD)
- SBI Gold ETF (SETFGOLD)
- Comparison of Top ETFs in India
- What is an Exchange Traded Fund?
- Risk of Investing in ETF
- Why Invest in ETF?
Best ETFs of 2024
Tata Nifty Private Bank ETF
Expense Ratio
0.13%
Returns
12.11% (3-year performance)
Tracking Error
0.14% (As of May 23, 2024)
Expense Ratio
0.13%
Returns
12.11% (3-year performance)
Tracking Error
0.14% (As of May 23, 2024)
Tata Nifty Private Bank ETF’s three-year share price returns of 12.11% demonstrate the fund’s ability to deliver long-term appreciation to its investors. The fund’s tracking error of 0.14% suggests that the ETF closely follows the portfolio’s benchmark performance. Also, its low expense ratio of 0.13% means lower costs for investors money. The expense ratio is the fee you pay to the AMC to manage your investments. The expense ratio of 0.05% to 0.75% is considered reasonably good.
SBI Nifty Private Bank ETF (SBIETFPB)
Expense Ratio
0.15%
Returns
18.86% (Since inception)
Tracking Error
0.03% (As of May 22, 2024)
Expense Ratio
0.15%
Returns
18.86% (Since inception)
Tracking Error
0.03% (As of May 22, 2024)
SBI Nifty Private Bank ETF provided a return of 12.09% in its first three years since its launch on Oct. 19, 2020 – 12.62% in the first year and 18.85% since inception. Such a return with a low tracking error of 0.03% suggests that the scheme is a good fit for investors looking for long-term capital appreciation from securities focused on banking companies. The scheme that tracks the Nifty Private Bank Index is an open-ended scheme with an AUM of INR 171.30 cr as of April 30, 2024.
Axis Nifty Bank ETF (AXISBNKETF)
Expense Ratio
0.18%
Returns
22.04% (Since inception)
Tracking Error
0.04% (As of May 22, 2024)
Expense Ratio
0.18%
Returns
22.04% (Since inception)
Tracking Error
0.04% (As of May 22, 2024)
Axis Nifty Bank ETF has delivered a remarkable return of 22.04% since inception, 15.17% in three years, and 14.83% in five years. Over time, the fund has demonstrated a significant approach to delivering value to investors’ money. Additionally, the tracking error of 0.04% suggests that the Axis Nifty Bank ETF closely follows the portfolio’s benchmark performance, which tracks Nifty Bank index stocks. A lower tracking error indicates investors may incur reduced costs from volatile performance irrespective of their investment tenure.
Kotak Nifty Bank ETF (BANKNIFTY1)
Expense Ratio
0.16%
Returns
12.56% (In 7 years)
Tracking Error
0.04% (As of May 22, 2024)
Expense Ratio
0.16%
Returns
12.56% (In 7 years)
Tracking Error
0.04% (As of May 22, 2024)
Like any other ETF, the Kotak Nifty Bank ETF has no lock-in and exit load, which means investors do not have to pay a fee to the AMC to exit the fund and can choose to sell units whenever they want. Since its launch on Dec. 12, 2014, the fund has delivered a return of 11.04%. The equity ETF that tracks the Nifty Bank index had an AUM of 5,364 crore as of April 30, 2024.
The fund has shown prospects to beat inflation when invested for at least five years. Remember, ETFs provide varied returns in response to market shifts, which can reduce your investment value due to increased short-term volatility. The fund is best suited for equity investors who seek long-term capital growth.
HDFC NIFTY Bank ETF (HDFCNIFBAN)
Expense Ratio
0.16%
Returns
24.41% (Since inception)
Tracking Error
0.03% (As of May 22, 2024)
Expense Ratio
0.16%
Returns
24.41% (Since inception)
Tracking Error
0.03% (As of May 22, 2024)
The fund that tracks India’s banking sector is an excellent passive investment with a low tracking error of 0.03%. A lower tracking error suggests that the ETF closely follows the portfolio’s benchmark, which could be ideal for investors seeking a long-term investment horizon. The fund has provided 15.14% earnings in three years and 24.41% since inception.
Nippon India ETF Nifty Bank BeES (BANKBEES)
Expense Ratio
0.19%
Returns
14.90% (Since inception)
Tracking Error
0.03% (As of May 23, 2024)
Expense Ratio
0.19%
Returns
14.90% (Since inception)
Tracking Error
0.03% (As of May 23, 2024)
The Nippon India ETF Nifty Bank BeES, which tracks the Nifty Bank index, has a standard deviation of 16.15, and beta is moderately volatile at 0.97. While the standard deviation measures the fund’s volatility, beta represents the change in the ETF’s price movements and the market index. Since its inception on May 27, 2004, the ETF has delivered a return of 14.90%. The fund had a tracking error of just 0.03%, suggesting that the fund closely mirrors the index performance.
HDFC Gold ETF (HDFCGOLD)
Expense Ratio
0.59%
Returns
9.44% (Since inception)
Tracking Error
0.20% (As of May 22, 2024)
Expense Ratio
0.59%
Returns
9.44% (Since inception)
Tracking Error
0.20% (As of May 22, 2024)
HDFC Gold ETF has a reasonable expense ratio of 0.59% compared to most of its peers tracking the performance of gold. The fund has provided a 17.92% return in one year and 16.43% in five years. Investors should seek advice from fund managers to understand why the high expense ratio is high. The expense ratio of 0.05% to 0.75% is reasonably good.
SBI Gold ETF (SETFGOLD)
Expense Ratio
0.65%
Returns
10.17% (Since inception)
Tracking Error
0.17% (As of May 22, 2024)
Expense Ratio
0.65%
Returns
10.17% (Since inception)
Tracking Error
0.17% (As of May 22, 2024)
With a whopping INR 4,582.55 crore AUM, SBI Gold ETF has delivered 10.17% returns since its launch on Apr. 28, 2009. It has provided 16.67% returns in five years, 14.34% in three years, and 17.83% in one year. The ETF tracks the real-time performance of gold in the market, offering an ideal way to invest in gold, gold bullion, and gold-related securities.
It is important to note that every change in the price of gold will change the fund’s NAV units. Values of gold ETFs are based on the gold prices published by the London Bullion Market Association (LBMA).
Comparison of Top ETFs in India
What is an Exchange Traded Fund?
An ETF is an exchange-traded fund, meaning investment funds can be bought or sold on the stock exchange. The investment instrument provides an excellent opportunity for investors to diversify their portfolios through a passive investment strategy to maximize returns by minimizing frequent buying and selling.
Like actively managed investment instruments, ETFs give investors broad access to markets across equities, commodities, currencies, and fixed-income. The difference is that the fund seeks to replicate or mirror the performance and composition of an index, such as Nifty50, or sectors like Nifty IT.
Since their launch in the National Stock Exchange (NSE) on Jan. 8, 2002, ETFs have gained popularity over the years as most ETFs disclose their holdings daily, and their fees are historically lower than mutual fund fees.
Major types of ETFs
Here are the different types of ETFs available in India.
Equity ETFs: These investment funds track or replicate benchmark indices and sectors, such as the Nifty Bank index, which tracks the performance of Indian banks.
Fixed-Income ETFs: These funds invest in fixed-income securities, including debts, bonds, etc.
Commodity ETFs: These funds represent commodities such as precious metals such as gold and silver and natural resources like oil and gas.
Currency ETFs: These investment funds track the prices of different currencies globally.
Risk of Investing in ETF
ETFs provide investors with an excellent opportunity to diversify their portfolio across market segments, including equities, commodities, currencies, and fixed-income. However, there are risks associated with investing in ETFs.
Market Risk: Even if you are familiar with market movements, you can still lose money on ETFs. In a stressful market situation, the value of the underlying ETF can decline, leading to a decline in its net asset value and market price.
Volatility: Although most ETFs offer low volatility, it is essential to understand what the underlying ETF is tracking. For instance, the ETF that tracks energy sectors is likely more volatile than the ETF tracking the banking index.
Lack of Control: When investing in an ETF, you do not have control over the individual stock. Instead, it replicates or tracks the performance of an underlying index, such as Nifty50, or sectors like Nifty IT.
Tracking Error: Although ETFs aren’t free from tracking errors, the investment fund with a high tracking error margin would mean minimal profit or even loss for investors.
Liquidity Risk: Investors should consider liquidity before investing in an ETF. An ETF with a higher liquidity will have a lower bid-ask spread.
Why Invest in ETF?
Tradability: ETFs can be bought or sold on stock exchanges throughout the trading day at their current prices, allowing investors to adjust their investment positions with changing market conditions. The passively managed investment instrument also provides flexibility in trading strategies, including options trading, short selling, and stop orders.
Transparency: ETFs provide investors with better transparency into their holdings, which are the collection of stocks, bonds, and securities.
Diversification: ETFs provide an effective way to diversify an investment portfolio and reduce risks as they mirror underlying indexes that represent equities, commodities, currencies, and fixed-income groups.
Lower Fees: ETFs attract lower fees than most passively managed investments, such as mutual funds. A low expense ratio means lower costs for investors, and low tracking error suggests that the ETF closely follows the portfolio’s benchmark performance.
Flexibility: ETF investments can be both long-term and short-term. ETFs can be bought or sold during trading hours, or investments can be held for an extended period.
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1
AngelOne
Account opening charges
INR 0 for first year
Brokerage
INR 0 brokerage
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Buy digital gold for INR 100 with Angel One, 2.5% fixed interest guaranteed annually
2
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A/C Opening Charges
Nil
Equity Delivery Brokerage Charges
INR 20 or 2.5% of per executed order whichever is lower
Android Downloads
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3
BlackBull Markets
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Listed On Deloitte Fast 50 index, 2022 Best Global FX Broker – ForexExpo Dubai October 2022 & more
Best-In-Class for Offering of Investments
Trade 26,000+ assets with no minimum deposit
Customer Support
24/7 dedicated support & easy to sign up
Bottom Line
ETFs are passive investment instruments replicating market indices or sectors such as equities, commodities, currencies, and fixed income. Although ETFs are known for their low-risk approach, they are not free from market risk, tracking error, etc. Investors should do their due diligence to choose the fund that matches their investment goals. ETF units can be bought or sold throughout the trading hours; however, a long-term investment approach has proven more beneficial.
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