Team ETF vs Team MF

My Finance Polls
1

As a retail investor, If given a choice to have only one of them in your portfolio, what would you choose and why?

  • ETF
  • Mutual Funds
  • Both :sunglasses:

0 voters

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2

ETFs are pretty popular in developed countries where it has consistently outperformed mutual funds. However, in the case of emerging market economies (such as our country) due to high growth potential, mutual funds tend to outperform ETFs.

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3

I mainly shifted recently to ETFs and passive investing in general, reduce my fees as ETFs have less expense ratio, they track indices (not only of India but of other countries as well) so gives me exposure of USA and other markets.

ETF and Mutual funds differences:

  1. ETFs are passively managed funds vs Mutual Funds which are actively managed

  2. ETFs are Lower fees vs Mutual Funds (even when compared to direct funds)

  3. ETFs are traded on the markets and prices are real-time vs Mutual Funds whose value is calculated at the end of the day only once.

  4. ETFs have immediate liquidity since traded on the markets very much like a stock vs Mutual Funds which are liquid but the transactions can take 1-3 Days for settlement.

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4

MFs for a beginner like me are very flexible as I can choose the SIP amount as per pocket size. It doesn’t demand demat and trading account! Also, I feel ETFs demands one to be disciplined

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5

I disagree with @Dev
Even if Mutual funds outperform ETFs, the expenses involved at the end of the day generates lower or at best same returns. The ETFs diversification is pretty well justified hence very less risky

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6

If to xhoose only one then I’d go for ETFs as they can provide more tax benefits to its investors as compared to mutual funds owing to the manner of creation and redemption.

7

In India you primarily have ETFs based on various indices (equity), and you are a beginner to investments either ETFs or Index funds are the first to go choice. Also if you are an retail investor Index mutual funds are a better options even with respect to cost, processes and tracking. Though the expense ratios of ETFs are marginally better (nowadays) on palate they don’t take into account the brokerage fees (when you buy or sell on the exchange) or the premium or discount to the NAV. ETFs are a superior option to an institutional or an investor who trades often.

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8

Hi @Usman would it be possible for you to elaborate on this? I was under the assumption both equity MFs and ETFs will be taxed similarly with Capital Gains?

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9

They do non equity MFs and ETFs have the same tax treatment

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10

Equity MFs and Equity ETFs will be taxed similarly
Other MFs and Gold, Debt, International ETFs are taxed similar to other than equity ETFs

Hope this helps!

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