ETFs (Exchange Traded Funds) and mutual funds both help in long-term wealth creation, but they serve different investor needs. ETFs are passively managed, often tracking an index (Nifty
50, Sensex etc.), and usually come with lower expense ratios. However, they require a Demat account and are bought/sold like stocks. Not all ETFs have option to invest via SIP route (monthly).
Mutual funds are professionally and actively managed funds providing diversification more suitable for hands-off investors. Mutual Fund also have passive funds (Index Funds) comparable to ETFs. However, ETFs are dynamically priced as they are listed on a stock exchange (demand & supply driven) whereas index funds, like all other mutual funds, are priced once a day after the markets close for the day.
With options like SIP, mutual funds offer simplicity & convenience for long-term investors, while ETFs offer cost-efficiency. Choosing between them depends on an investor’s prowess, investing style, cost sensitivity, and personal preference.
