Exchange Traded Fund | Financial Planning | Saving and Investment Plan

All you Need to Understand about ETF Investment

Explore how ETFs combine the benefits of stocks and mutual funds to offer a cost-effective, transparent, and flexible investment option.

Written by : Knowledge Center Team

2025-11-10

4895 Views

6 minutes read

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ETFs or Exchange Traded Funds have gained immense popularity worldwide since their launch in the USA in 1993.

 Exchange-Traded Funds (ETFs)  were launched in 2002 by the Benchmark Mutual Funds. Initially, it started as the Nifty Benchmark Exchange-Traded Scheme (Nifty BeES). People looking to invest consider a variety of options such as savings plans, mutual funds, gold bonds, etc. ETF is also another option that may be considered. But is it worth it?

Key Takeaways

  • ETFs combine diversification and stock-like trading flexibility, giving investors control over intraday transactions.

  • They have low fund management fees and full NAV transparency during market hours.

  • Since ETFs are market-linked, returns are not guaranteed and may differ slightly from the index.

  • ETFs suit experienced investors who can manage risks and time the market effectively.

  • Canara HSBC Life Insurance saving plans offer guaranteed benefits, life cover, and long-term stability.

What is an ETF?

Exchange-Traded Funds (ETFs) are a type of mutual fund that trades on stock exchanges like individual stocks. They combine the diversification of mutual funds with the flexibility of stock trading, allowing investors to buy and sell units throughout the day. This makes ETFs a convenient and cost-effective investment option for many investors.

Pros and Cons of Exchange Traded Fund

The ETFs collect funds from various investors and further hold a fund manager and a Net Asset Value similar to a mutual fund. Although there are two prominent characteristics of an Exchange Traded Fund that makes it different from mutual funds:

  • An Exchange Traded Fund (ETF) can be easily traded in a stock market, similar to shares.

  • ETFs are passively regulated funds and normally follow an index. It has emerged as one of the most widespread sorts of passive investing in the country.

ETFs (Exchange Traded Funds) are listed and registered on a stock exchange similar to other stocks. You  can exchange them l and the value of every unit of these Exchange Traded Funds is not defined by the Net Asset Value. It is through the prevailing supply and demand in the market. You.must open a trading and a Demat account to be qualified to trade in ETFs.

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Benefits of Investing in ETFs

With the help of these Exchange Traded Funds (ETFs), you can easily control and leverage the growth prospects of the Sensex and the Nifty. These ETFs hold the potential to take your revenue maximisation to a whole new level.

They stimulate the profits of underlying assets like gold, index, or bonds, where investors can gain index-linked profits at a more subordinate cost. ETFs might further assist you  in gaining a return on investment that nearly matches a provided index.

Disclaimer: Since Exchange Traded Funds (ETFs) are linked to the stock market, their returns are not guaranteed. The returns may slightly differ from the actual returns of the index they aim to track.

Mentioned below are some of the advantages of investing in ETFs:

  • ETFs are Cost-effective: ETFs are an investment product that holds a more economical expense ratio than mutual funds. Fund management expenses are moderate,  that  can create incremental profits and might boost return on investments in the long term.
    The expense of operation of Exchange Traded Funds is further lower due to marginal fund management fees. Also, the assistance expenses are close to zero because brokers practice client assistance. Hence, fund regulatory charges run down for ETFs.
    These are all the reasons ETFs are regarded as one of the most cost-efficient investments. When people invest through smaller sums, compounding gets linked with moderate fund management expenses. It enables them to boost the portfolio gains.
  • ETFs Have Complete Transparency: After investing in Exchange Traded funds, you can monitor the fund's NAV (Net Asset Value) during market operating hours. When examining an ETF investment, you can identify the NAV (Net Asset Value) value traded on the trading day.
    This transparency is more dependable than the conventional open-ended mutual funds, which do not rate their funds until the end of the trading day.
  • ETF Investments are Convenient: When compared to other market instruments, investing in ETFs is more convenient. The main reason for this convenience is that it extends the flexibility of buying and selling funds quickly. Apart from this, you can further perform intraday deals through Exchange Traded Funds.
    With ETFs, you do not need to worry about redemptions, as exchange trading solely points to the transfer of ETF units and does not move the Asset Under Management (AUM). Therefore, in the event of index Exchange Traded Funds, the tracking deviation can be moderate compared to index funds.
  • ETFs Provide Trading Flexibility: ETFs allow you to buy and sell funds at any time during market hours, making intraday trading possible.
    Unlike the prices of shares that vary throughout the day based on the shifting intraday price of the underlying assets in the fund, the value of Exchange Traded Funds shares is constant during regular exchange hours.
    Suppose you, as an investor, are looking to expand your investments and hedge against volatility arising from international and national effects, or obtain exposure to a particular market or industry. In that case, ETFs might be the absolute asset for your investment portfolio. Investing in Exchange Traded Funds is not at all risky as opposed to other classes of equity instruments.
    ETF investors can comprehend within minutes how much they spent to purchase the ETF units and how much they obtained after trading. With the help of ETFs or Exchange Traded Funds, the creation of wealth over an extended time becomes more comfortable as they proffer transparency, flexibility, and diversification.
    Investing in Exchange Traded Funds is not just suitable for initial-time investors who are presently at the outset of their investment crusade, but further acts as a great long-term strategy for well-established investors.
  • iSelect Guaranteed Future Plus: Assured Returns with Flexibility: ISelect Guaranteed Future Plus by Canara HSBC Life Insurance gives you the assurance of fixed benefits with the added security of life cover. It suits your long-term needs and adapts to your goals.

    1. Guaranteed Maturity or Income: You receive guaranteed benefits at maturity, either a lump sum or steady income. This gives you the power to plan confidently for future needs, like education or retirement. The plan ensures peace of mind with predictable, tax-efficient returns.
    2. Life Insurance Coverage: Your family remains protected throughout the policy term. If something happens to you, the plan pays the life cover benefit, helping your loved ones stay financially secure. This dual advantage of life insurance and guaranteed returns makes it a smart long-term choice.
    3. Flexible Policy Terms: You can choose how long you want to pay premiums and when to receive your benefits. Whether you prefer short-term premium commitments or longer horizons, the plan adapts to your needs. It aligns easily with your financial planning goals and cash flow preferences.
    4. Option to Add Riders: You can enhance your protection by adding optional riders like accidental death or critical illness. These add-ons increase the plan’s coverage and help you stay prepared for life’s uncertainties, ensuring comprehensive protection beyond the core policy benefits.
  • Promise4Future - Long-Term Wealth with Protection: Promise4Future plus by Canara HSBC Life Insurance helps you grow wealth while securing your future goals. With life cover and flexible savings options, this plan supports milestone-based planning like a child’s education,  retirement dreams, etc.
  • Goal-Based Savings: You can link your policy to a specific life goal like higher education, home buying, or marriage. The structured savings approach ensures you stay committed to the timeline and the  ultimate goal. It motivates disciplined investing aligned to real-life milestones.
  • Life Cover Throughout: The policy includes life insurance coverage that continues for the full policy term. If the unexpected happens, your loved ones receive the payout. This ensures that your financial plans remain intact during critical times.
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Conclusion

ETFs offer cost-efficiency, flexibility, and diversification, making them a compelling choice for market-savvy investors. However, if you seek guaranteed returns with life cover, savings plans from Canara HSBC Life Insurance can be a smarter alternative. Choose based on your financial goals, risk appetite, and long-term vision for peace of mind.

Disclaimer - This article is issued in the general public interest and meant for general information purposes only. The views expressed in this blog are solely those of the writer and do not necessarily reflect the official policy or position of Canara HSBC Life Insurance Company Limited or any affiliated entity. We make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability, or availability with respect to the blog or the information, products, services, or related graphics contained in the blog for any purpose. Any reliance you place on such information is therefore strictly at your own risk. You should consult with a qualified professional regarding your specific circumstances before taking any action based on the content provided herein.

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