ETF and Index Funds

Your cover story titled ‘Making ETF a Part of your Portfolio’ was quite insightful. However, is the expense ratio the only difference we should look for between an ETF and index fund?

- Sagar Karadkar

Editor Responds : Thank you for writing to us. Expense ratio always remains the prime factor for deciding a fund. Nonetheless, in the case of ETFs versus index funds you need to consider other factors of expense in case of ETFs such as liquidity and impact cost while trading in them. Therefore, you should have a holistic picture of the expense ratio while investing in ETFs.