Investors gaining knowledge on investment products have over the years now been enchanted by ETFs which is a form of passive investing and provides all such benefits as low cost, transparent pricing as well as meet asset allocation needs. Moreover with the far-reaching results of use of technology now ETFs that invest overseas have been also available for investors and they have been the best return generators say for now the NASDAQ 100 ETF by Motilal Oswal.
Now an integral parts that comes into play while choosing the ETF has also been discussed before is the cost aspect also known as expense ratio which though is low for these products, needs to be still checked for. Here we will tell why and basis that we'll tell some of the best ETFs based on lowest expense ratio.
And the simple prejudice to go by here is that total cost including the brokerage cost for an ETF should be less than that charged by similar index fund. And hence going for an ETF with a discount broker can be rewarding.
And this cost factors become even more important with time say for an ETF you pay 5 bps as the expense ratio then over 10 years period your cost will be 50 basis point. 1 basis point is one hundredth of a percentage point. So, as this reduces the investors' return, it makes sense to go by low-cost product which in ETF gamut is denoted by lower expense charges.
Bharat 22 ETF i.e not from the Nifty or Sensex backed category and is rather a government backed ETF carries the lowest expense ratio at 0.01%.
Now here are some Nifty and Sensex based ETF that carry the lowest expense ratio:
|HDFC Nifty 50 ETF||0.05%|
|HDFC Sensex ETF||0.05%|
|ICICI Prudential Nifty ETF||0.05%|
|Nippon India ETF Nifty BeeS||0.05%|
|IDFC Nifty ETF||0.06%|
|Edelweiss ETF Nifty 50||0.07%|
|Nippon India ETF Sensex||0.07%|
|ICICI Prudential Sensex ETF||0.08%|
Gold ETFs in comparison carry a higher expense ratio of between 0.45% to 0.51% but have also the potential to generate as in the current times good enough returns.
Note the data on the expense ratio and ETF scheme has been taken from Moneycontrol website as on October 6, 2020.
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