Let me encapsulate the main ones here before going into their specifics.Ĭan only be redeemed after the price is published at the end of the trading dayĬan be traded anytime during the market hours

That's because there are certain distinctions as well. This tends to keep their costs low, as fewer administrative and management activities are involved. One more common bond is that they are passively managed. Diversification is lesson #1 in any financial literacy course.īy investing in different assets, you can reduce your risk and exposure and protect your portfolio from market volatility.

Another similarity is that there is a vast array of ETFs and Index Funds with various underlying asset classes allowing you to diversify your portfolio. Hence, their performance is usually more predictable, which is often directly correlated to the performance of their master, so to speak. Common Bonds - No, Not The Income Bondsīoth these funds tend to follow a targeted index or theme-based basket of stocks. Passive management translates to a low involvement of the fund managers in choosing which stocks to include in the fund’s asset allocation mix. Index Funds are passively managed mutual funds (or even ETFs in some cases) that are built to replicate the performance of the indices they track. They track indices like Nifty 50 or BSE Sensex or thematic sectors like green energy or rural development and are traded on the stock exchange. Before that, let’s take a step back and have a quick overview of both these financial funds.Įxchange-Traded Funds (ETFs) work like Mutual Funds and have a pool of equity from a large number of investors. While most people are always curious about the differences between ETFs and Index Funds, let’s look at the common factors first.

Etf vs index fund