Invest in ETFs in India — Exchange Traded Funds on NSE & BSE
An ETF is a basket of securities that trades like a stock, combining mutual-fund diversification with stock-like liquidity. With Shriram — SEBI-registered, 40+ years of trust — invest in 100+ ETFs across equity, gold, debt, sectoral and international categories.
What is an ETF? — Meaning & Definition
An ETF is a basket of securities that trades on NSE/BSE like a stock — pooling investor money into a fund that mirrors an index, with units traded live on the exchange throughout market hours. Unlike a mutual fund (priced once daily), an ETF gives you real-time pricing, intraday liquidity, and very low annual cost. You need a Demat account to hold ETF units.
How it differs from a stock
A stock represents one company. An ETF holds dozens or hundreds of securities, giving you instant diversification in a single buy order — with the same ease of trading as a stock.
How it differs from a mutual fund
A mutual fund is priced once at end of day. An ETF trades at live market prices all day. ETFs are almost always passively managed, keeping costs far lower than active mutual funds.
How ETFs Work — Creation & Redemption Mechanism
ETFs are created and redeemed by Authorised Participants (APs) who keep the ETF price in line with its underlying NAV. Understanding this mechanism helps explain why ETF prices stay close to fair value even during volatile sessions.
AP Assembles Basket
Authorised Participant assembles the underlying securities basket that mirrors the index.
Fund House Issues Units
Fund house issues ETF units to the AP in exchange for the underlying basket ("creation").
Listed on Exchange
Units are listed and traded live on NSE/BSE at real-time market price throughout the day.
Investors Buy & Sell
You buy/sell freely at live market price via your Demat and trading account, just like stocks.
iNAV Published Intraday
Indicative NAV is published every 15 seconds, keeping ETF price anchored to fair value.
AP Redeems Units
AP redeems large blocks for the underlying basket, balancing supply/demand and keeping price tight.
Types of ETFs Available in India
Seven ETF categories are available on Indian exchanges, covering equity, commodities, debt and global markets — each serving a different investment objective.
Equity ETF
Track stock market indices like Nifty 50, Sensex and Nifty Midcap — broad market exposure at very low cost.
Gold ETF
Track domestic gold price. 1 unit ≈ 1 gram of 99.5% pure gold. No storage risk, tradeable like a stock.
Silver ETF
Track domestic silver price on NSE/BSE. Convenient way to hold silver without physical delivery.
Debt / Bond ETF
Track G-Sec or corporate bond indices. Lower volatility than equity ETFs, better liquidity than bond funds.
Sectoral ETF
Track sectors: Banking (BANKBEES), IT, Pharma, FMCG. Concentrated exposure to a single industry.
International ETF
Track global indices — Nasdaq 100, S&P 500, MSCI World — from India. Currency diversification built in.
Smart Beta ETF
Factor-based strategies — Momentum, Low Volatility, Quality, Equal Weight — that go beyond simple index replication.
ETF vs Mutual Fund — Key Differences
Both pool money across securities and offer SEBI-regulated diversification. The key differences are trading mechanism, cost, and the level of automation available.
Feature
ETF
Mutual Fund
Trading
Real-time on exchange all day
Once per day at end-of-day NAV
Expense Ratio
0.05–0.50% per annum
0.5–2.5% (active funds higher)
SIP Availability
Manual trigger required
Auto-debit fully automated
Demat Required
Yes
No — can invest via AMC directly
Min Investment
Price of 1 unit (as low as ₹30)
₹500 per instalment (SIP)
Transparency
Portfolio disclosed daily
Monthly portfolio disclosure
Manager Risk
None — passive, index-tracking
Yes for active funds; none for index
Tax Treatment
Same as equity mutual fund
Same as equity mutual fund
How to Invest in ETFs with Shriram
Six steps from account opening to buying your first ETF unit — entirely online, no physical paperwork required.
Open Demat Account
Open with Shriram — 100% online, paperless, in under 10 minutes. PAN + Aadhaar + bank details.
Activate Trading Account
Your trading account is linked automatically. Fund it via UPI or NEFT to start investing.
Search ETF Ticker
Search by ETF code on NSE/BSE (e.g., NIFTYBEES for Nifty 50, GOLDBEES for Gold ETF).
Place Buy Order
Market or limit order — just like buying a stock. Zero delivery brokerage with Shriram.
Units Credited T+1
ETF units are credited to your Demat account on T+1 settlement, same as equity.
Track via App
Monitor holdings, returns, and NAV via the Antara app or your portfolio dashboard.
ETF SIP — Can You Do a Systematic Investment in an ETF?
Yes — but unlike a mutual fund SIP, it isn't auto-debit. You (or a scheduled-order tool) place a recurring manual buy order each month. The advantage: you buy at the live market price and pay near-zero brokerage with Shriram.
Feature
ETF SIP
Mutual Fund SIP
Execution
Manual buy order on exchange
Auto-debit via AMC mandate
Automation
Requires manual action each month
Fully automated after one-time setup
Price
Real-time live market price
End-of-day NAV
Best For
Investors who want price control
Passive investors who want automation
ETF Charges & Expense Ratio — What You Actually Pay
The total annual cost of owning a passive Nifty 50 ETF works out to roughly 0.10–0.30%, compared to 1–2.25% for an actively managed equity mutual fund — a meaningful difference over a long horizon once compounding is factored in.
Charge
Amount
Notes
Expense Ratio (TER)
0.05–0.50% p.a.
Deducted from NAV daily — no separate bill
Brokerage
₹0 delivery / ₹20 intraday
Shriram flat-fee structure
STT
0.1% on sell (delivery)
Government securities transaction tax
GST
18% on brokerage
On brokerage amount only
DP Charges
₹15.93 per scrip on sell
CDSL charge on debit from Demat
Impact Cost
0.01–0.10%
Bid-ask spread on exchange — varies by liquidity
ETF Taxation — LTCG, STCG & How to File
ETF taxation in India depends on the underlying asset class. Capital gains from ETF sales must be reported under "Capital Gains" in your ITR, with equity and non-equity gains disclosed separately.
ETF Type
Short-Term (STCG)
Long-Term (LTCG)
Holding Period
Equity ETF
20% flat (< 12 months)
12.5% on gains above ₹1.25L
> 12 months for LTCG
Gold ETF
Slab rate (< 24 months)
12.5% flat
> 24 months for LTCG
Silver ETF
Slab rate (< 24 months)
12.5% flat
> 24 months for LTCG
Debt / Bond ETF
Slab rate (any period)
Slab rate — no indexation post Apr 2023
Any holding period
Important: Finance Act 2023
Indexation benefit for debt mutual funds and debt ETFs was removed for units purchased on or after 1 April 2023. Gains are taxed at your income slab rate regardless of holding period. Keep records of purchase price, sale price, and holding period for each transaction.
Top ETFs to Consider — Nifty 50, Gold, Banking & More
Rather than a definitive ranking, here's a curated look at category-leading ETFs based on AUM, cost, and trading liquidity. When comparing ETFs within the same category, prioritise lower tracking error, higher AUM, and a tighter bid-ask spread over chasing the highest recent return.
Category
ETF Name (example)
AUM (approx)
Expense Ratio
1Y Return (approx)
Large Cap Equity
Nifty 50 ETF (NIFTYBEES)
₹25,000 Cr+
0.05–0.10%
14–18%
Banking
Nifty Bank ETF (BANKBEES)
₹8,000 Cr+
0.05–0.12%
10–15%
Gold
Gold ETF (GOLDBEES)
₹10,000 Cr+
0.50–0.65%
12–18%
Mid Cap
Nifty Midcap 150 ETF
₹3,000 Cr+
0.20–0.30%
18–25%
International
Nasdaq 100 ETF (MO N100)
₹5,000 Cr+
0.40–0.60%
20–30%
* Indicative data. Verify current figures before investing. Past performance is not a guarantee of future returns.
ETF Portfolio Construction — Build a Passive Portfolio
ETFs are versatile building blocks for a low-cost, diversified portfolio. Your ideal mix depends on age, goals, and risk appetite — younger investors can afford a higher equity allocation, while those nearing a goal may tilt toward debt and gold for stability.
Beginner 3-ETF Portfolio
70% Nifty 50 ETF + 20% Gold ETF + 10% Short Duration Debt ETF. Simple, broadly diversified, very low cost (~0.10% blended TER). Ideal for investors starting out.
Advanced Core-Satellite
60% Nifty 50 ETF (core) + 20% Nifty Midcap ETF + 10% Nasdaq 100 ETF + 10% Gold ETF. Higher growth potential with moderate diversification across geographies and market caps.
Risks of Investing in ETFs — What to Watch Out For
ETFs are generally a lower-cost, transparent way to invest — but like any market-linked product, they carry risks worth understanding before you commit capital.
Tracking Error
Small gaps between the ETF's return and the index it tracks can erode performance over time. Choose ETFs with lower tracking error.
Liquidity Risk
Sectoral and debt ETFs can have thin trading volumes and wide bid-ask spreads. Stick to high-volume ETFs for easier entry and exit.
Market Risk
Equity ETFs fall when markets fall — no active downside buffer. Use debt or gold ETFs to balance overall portfolio risk.
Low AUM Risk
ETFs with AUM below ₹100 Cr may be wound up by the AMC. Always verify AUM before investing in niche or sector ETFs.
Investments in securities markets are subject to market risk. Please read all scheme-related and exchange documents carefully before investing.
Who Should Invest in ETFs? — Suitability & Investor Profiles
ETFs work well for almost every investor type because of their flexibility and low cost. The right starting point depends on your goals, time horizon, and comfort with active monitoring.
Beginner Investor
Start with a Nifty 50 ETF — broad diversification, very low cost, and easy to understand as a first investment.
Salaried Investor
Manual monthly buys of a Nifty 50 ETF mimic a SIP and build long-term wealth at a fraction of active fund costs.
Active Trader
Use sectoral ETFs (Banking, IT, Pharma) for tactical short-term bets without individual stock-picking risk.
HNI / NRI
Nasdaq 100 and S&P 500 ETFs give global diversification within LRS limits — convenient from an Indian account.
Documents & Eligibility — Open a Demat Account
Any resident Indian adult (18+) with a valid PAN and Aadhaar can open a Demat account online. NRIs can also invest subject to FEMA and RBI guidelines using an NRO/NRE-linked trading account.
Documents Required
PAN card — mandatory for all investors
Aadhaar card — address proof and e-KYC
Cancelled cheque or recent bank statement
Passport-size photograph (digital JPEG)
Valid mobile number and email address
Eligibility Criteria
Indian resident (NRIs via NRO/NRE route)
Valid PAN card — mandatory for all investors
Active savings bank account in your name
Completed KYC as per SEBI regulations
18+ years of age (minors via guardian)
Frequently asked
questions.
What is an ETF in simple terms?
An ETF (Exchange Traded Fund) is a basket of securities — stocks, gold, or bonds — that trades on NSE/BSE like a single stock. It passively tracks an index and has very low annual fees.
Is ETF safe to invest in?
ETFs are regulated by SEBI and are as safe as the underlying assets they track. Equity ETFs carry market risk; debt ETFs carry interest-rate and credit risk. Always match the ETF category to your risk appetite.
Can I do a SIP in ETFs?
Yes, but unlike mutual fund SIPs there is no auto-debit. You place a manual buy order each month. Some brokers offer a scheduled order feature that automates this for you.
What is the minimum investment in an ETF?
You can buy a single unit of an ETF. Nifty 50 ETFs are typically priced ₹200–₹300 per unit; GOLDBEES trades around ₹50–₹60 per unit. There is no minimum beyond the price of one unit.
What is tracking error in ETF?
Tracking error is the difference between the ETF's actual returns and its benchmark index. A lower tracking error means the ETF mirrors its index more accurately and is generally preferred.
Is ETF better than mutual fund?
ETFs have lower costs and real-time trading. Mutual funds offer automated SIP and professional management. ETFs suit cost-conscious passive investors; active mutual funds suit those wanting stock selection and full automation.
How is ETF taxed in India?
Equity ETFs: 20% STCG (< 12 months) and 12.5% LTCG on gains above ₹1.25L (> 12 months). Gold/Silver ETFs: slab rate STCG (< 24 months) and 12.5% LTCG (> 24 months). Debt ETFs are taxed at slab rate regardless of holding period.
What is the difference between Nifty 50 ETF and Nifty 50 Index Fund?
Both track the Nifty 50. The ETF trades in real time on the exchange; the index fund transacts once at end-of-day NAV and does not require a Demat account. Both have similarly low expense ratios.
Is a Demat account required for ETF?
Yes. ETF units are held in your Demat account just like shares. You need a Demat and trading account to buy or sell ETFs on NSE/BSE.
What is AUM in ETF?
AUM (Assets Under Management) is the total market value of all units in the ETF. Higher AUM generally means better liquidity on the exchange and a tighter bid-ask spread.
Ready to Invest in ETFs?
Open your Demat account with Shriram in under 10 minutes. Zero delivery brokerage. 100+ ETFs on NSE/BSE. SEBI-registered.
Start investing in ETFs in India — zero delivery brokerage.
0 account opening fee. SEBI-registered. 40+ years of trust.