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What are ETFs?

ETFs stand for exchange traded funds which are the cost effective and easy way for investors to achieve the same returns as they would get by investing in indexes like FTSE. All penny stocks shares of ETFs are under India’s nifty fifty index and the EFT shares can be sold and bought on the penny stock market in the same way as the other shares in the market. Investors would gain profit because of both the mutual fund and the stock exchange characteristics.

ETFs came to Europe in the year 2000 and they are growing exponentially on the basis of assets under trading volumes, managements, breadth of market coverage etc. ETFs have advantage from the intraday trading or from the close to, net asset value which can give access to the whole market by purchasing one particular penny stock share.

ETFs can be sold or bought easily through financial advisers or through stock brokers and have various trading benefits. Here we will discuss about them in detail.

Cost effective: compared to the traditional trading funds, ETFs are cheaper and the total expense ratio of an ETF is around 0.3% compared to the 1.6% for the traditional managed funds. They do not need to be managed actively, thus helping investors avoid the need of hired analysts or fund expertises. You can also escape the stamp duty charges in UK if you have the ETF, which is normally listed in the purchase of London listed shares.

Diversification: ETF works well for the long term investment plan and offers convenient alternative to the buying of indexes with underlying securities. ETFs are entire markets wrapped up in one share and they help in the bulk securities from indexes by buying a FTSE share. Hence, you will get access to the entire FTSE index and the ETF can access the entire asset class.

Real time trading: rather than one fixed time, ETFs can be traded in real time throughout the day with the system of unit trust or the multiple funds. You can get flexibility to travel in and out of the index or sector on the basis of fluctuations and volatility in the market.

Pensions and ISAs: You can opt for self-invested personal pensions with the ETFs. US is the largest market in the world for ETFs and is more advanced than the European market.

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