An Analytical Study on Exchange Traded Funds(EFT’s) and Its Relationship With Market Movements

Abstract

Exchange-traded funds (ETFs) can be a valuable component in any investor's portfolio, whether they are sophisticated institutional money managers or novice investors just starting out. Some investors make ETFs the sole focus of their portfolios, building a well-diversified portfolio with just a few ETFs. Others use ETFs to complement their existing portfolios, relying on them to implement sophisticated investment strategies. However, like any other investment vehicle, in order to truly benefit from ETFs, investors must understand and use them appropriately. It has been identified that Equity Exchange Traded Funds are riskier than Gold Exchange Traded Funds for both years. Among Equity Exchange Traded Funds, Bank-Equity Exchange Traded Funds exhibit less risk percentage change. It can be suggested that investors should avoid investing in any investment avenue, such as exchange-traded funds, that does not generate returns higher than the risk-free rate of return. It is important to analyse and assess the underlying asset of an exchange-traded fund before investing in it. Gold is considered a safe haven during economic crises, bringing stability to a portfolio during economic slowdowns and recessions. Exchange-traded funds represent a basket of securities traded on an exchange, much like stocks. They are listed on recognized stock exchanges, and their units are directly traded during regular trading hours. Exchange-traded funds have been developed to track various industrial sectors, investment styles, fixed income, global investments, commodities, and currencies