Exchange Traded Funds
What are ETFs?
- An exchange-traded fund (ETF) is a basket of securities that trade on an exchange. ETFs can contain all types of investments including stocks, commodities, or bonds.
- ETFs were started in 2001 in India.
- ETFs are in many ways similar to mutual funds; however, they are listed on exchanges and ETF shares trade throughout the day just like ordinary stock.
- The Government of India uses ETF to disinvest its holdings in public sector companies.
- Gold-backed ETFs are investment instruments that are based on price movements and investments in physical gold.
Why in News?
- Gold ETFs witnessed an inflow in August, for the fifth month in a row, amid major economies staring at a recession due to the spread of COVID-19 pandemic.
- Net inflow in gold ETF category, reached ₹5,356 crore in the January-August period.
- With all major economies staring at a recession due to the spread of the COVID-19 pandemic, gold, with its safe-haven appeal, has emerged as one of the best-performing asset classes and a preferred investment destination among investors.
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