Goal: Learn to leverage ETFs for cost-effective, diversified exposure to markets, sectors, and global economies.

1. What Are ETFs?
Definition: ETFs are baskets of securities (stocks, bonds, commodities) traded on exchanges like individual stocks.
– Passive ETFs: Track indices (e.g., Nifty 50, S&P 500).
– Active ETFs: Managed by professionals (rare in India).

Key Features:
– Low Expense Ratios: 0.1–0.5% vs. 1–2% for mutual funds.
– Liquidity: Trade intraday like stocks.
– Transparency: Holdings disclosed daily.

2. Passive vs. Active Investing

Why Passive Wins Long-Term:
– 85% of active funds underperform indices over 10 years (SEBI data).
– Lower fees compound into significant savings (e.g., ₹10L over 20 years at 12%: ETFs save ₹3.5L vs. active funds).

3. Types of ETFs for Indian Investors
A. Domestic ETFs

B. Global ETFs
Tax Note: Global ETFs are taxed as debt funds (20% with indexation post-3 years).

4. How to Invest in ETFs 
Step 1: Choose a Broker
– Discount Brokers: Zerodha, Upstox (₹20/trade).
– Platforms: Groww, Coin by Zerodha.

Step 2: Select ETFs
– Core Holding: Nippon Nifty 50 ETF (60% of ETF portfolio).
– Satellite Holdings:
– Motilal Oswal NASDAQ 100 ETF (20% global tech).
– SBI Gold ETF (10% hedge).
– ICICI Pru Nifty Next 50 ETF (10% mid-cap growth).

Step 3: SIP or Lump Sum?
– SIP: Use platforms like Coin by Zerodha for ETF SIPs (₹500/month).
– Lump Sum: Invest during market corrections (e.g., Nifty 50 P/E < 20).

Tasks for you.
1. Compare ETFs:
– Use ETF India or Valur Research to compare:
– Expense ratios of Nippon Nifty 50 ETF vs. UTI Nifty 50 Index Fund.
– 5-year returns of Motilal Oswal S&P 500 ETF vs. HDFC Sensex ETF.

2. Start Small:
– Buy 1 unit of Nippon Nifty 50 ETF (₹200) via Zerodha/Groww to understand the process.

3. Analyze Global ETFs:
– Study holdings of Invesco EQQQ NASDAQ-100 ETF (e.g., Apple = 12%, Microsoft = 10%).

Key Takeaways
1. Cost Matters: A 1% fee difference can cost ₹10L+ over 20 years.
2. Diversify Smartly: Combine domestic (Nifty 50) + global (S&P 500) ETFs.
3. Gold ETFs > Physical Gold: No storage hassles + tax efficiency (SGBs are even better).

FAQs for Indian Investors
– “Are ETFs safe?”
Yes! They hold underlying assets (e.g., Nifty 50 stocks) and are regulated by SEBI.
– “ETF vs. Index Fund?”
ETFs trade intraday; index funds settle at NAV. ETFs are better for liquidity.
– “Minimum investment?”
Just 1 unit (e.g., ₹200 for Nifty 50 ETF).

Sample ETF Portfolio for a 30-Year-Old