1. ETF transactions are carried out on the stock exchange where they are listed. Investors must have a trading account with a broker and a demat account, to be able to invest.
2. Each unit of gold ETF is equal to 1 gram of gold; each unit of equity index funds is 1/10th of the value of the index.
3. Units on the exchange are traded on the basis of real-time market price prevailing at the time of placing the order.
4. The settlement cycle for ETF units is similar to that of any other security traded on the exchange. The investor needs to pay in the funds to the broker before T+2.
5. ETF investors must bear brokerage payable on transactions and any adverse price due to the limited liquidity of ETFs.
(Content on this page is courtesy Centre for Investment Education and Learning (CIEL). Contributions by Girija Gadre, Arti Bhargava and Labdhi Mehta.)
