Best ETF Funds to Invest in 2022 India

Best ETF Funds to Invest in 2022 India

Updated on
Best ETF Funds to Invest in 2022 India

Top 8 ETF funds of India in 2022

In India, ETF trading has nearly doubled in a year, from INR 1.54 lakh crore at the start of FY21 to INR 2.9 lakh crore at the end of FY21. Compared to regular mutual funds, these funds have numerous advantages. Before jumping on the best ETF Funds to Invest in 2022 India, it’s crucial to understand what ETFs are and how to use them in a portfolio.

ETFs evolved as advanced or modified steps from mutual funds, with some additional advantages. They’re similar to passive mutual funds that monitor indices like the Nifty. On the other hand, ETFs are exchanged on the stock exchange, unlike regular funds. ETFs, unlike mutual funds, can only be traded once a day at the close of the stock market and by the issuing business.

What is ETF?

ETFs are almost similar to mutual funds in that they hold a group of stocks in the same proportion as the stock market index. ETFs, unlike mutual funds, can be exchanged on the exchange and entered or exited at the dynamically determined NAV. It is also known as passive funds among investors. The expense ratio of these ETFs is the lowest. The expense ratio is the price charged by AMCs to investors for managing their money.

Best ETF Funds to Invest in 2022 India

 Advantages of ETF investment

Returns that can be relied upon

The goal of active management funds is to outperform their benchmark index. They also risk losing money rather than getting larger returns. Because an ETF tracks an index, it will perform similarly to the index. If you think the Nifty will rise in the next few years, you may invest in a Nifty ETF and profit from its rise.

Tax advantage

In comparison to mutual funds, ETFs offer two significant tax advantages. Mutual funds have higher capital gains taxes than ETFs. Furthermore, capital gains tax on an ETF is only incurred when the investor sells the ETF, whereas capital gains taxes on mutual funds are passed on to investors throughout the investment’s life. ETFs, in brief, have reduced capital gains and are only taxed when the ETF is sold.

Low cost of investing

Actively managed mutual funds have high management fees because they require the expertise of a fund manager and research team. On the other hand, ETFs typically have little or no management fees. It’s simple to get started with passive investing with the best ETF funds in India because we can start with just one unit, and there are no entry or exit fees.

How to choose the right ETF?

Obviously, you want to enrich your portfolio with the best ETF funds in India in 2022. ETF units, unlike mutual funds, are traded on the stock exchange during trading hours. So, when the market is open, you can buy and sell ETF units like stocks. ETFs can be traded by anyone with a Demat account with any brokerage firm. You have to look at these factors to get the best ETF funds in India in 2022.

  • One of the factors that will affect the profitability of your investment is the ETF’s liquidity. Look for an ETF with sufficient liquidity.
  • Large fund ETF encourages the possibility of higher liquidity and lower cost. It is good to avoid small funds.
  • When it comes to investing in the best ETFs in India, the expense ratio of an ETF is typically the decisive factor. The expense ratio of a fund measures how much it costs to run it.
  • Age of ETF is a key factor as you can have previous data you can assume about the fund’s health.
  • It is an index-tracking fund. The tracking error of an ETF is the difference between its returns and those of the index. The more the tracking error, the higher the deviation, which is not good.

Top 8 ETF funds of India in 2022

Sector ETFs, Bond ETFs, Gold ETFs, Equity ETFs, and Commodity ETFs are the different types of exchange-traded funds available in India.

1. Best equity ETF of India in 2022 —

Nippon India Index Fund Nifty Plan-Growth

Nippon India Index Fund Nifty Plan is a Nippon India Mutual Fund House Open-ended Large Cap Equity strategy.

In the last 6 months, its absolute return has been downed by –12.99%; under SEBI’s calculator, it is a very high-risk category. However, its history of return is hopeful.

The current NAV is ₹27.89, and holding in large capital stock is 90%. The top 3 holdings are Reliance, HDFC, and Infosys.

The fund’s asset allocation is roughly 99.97% equities, 0.0% debts, and 0.03%  cash and cash equivalents.

The fund invests in various market capitalizations, with about 100.0%  in gigantic and big-cap companies, 0.0%  in mid-size, and 0.0%  in small-cap companies.

It now has ₹ 491.54 crores in Assets under Management, with the fund’s expense ratio being 0.86%.

Annualized returns yielded in the different periods are- 7.40%(1 yr), 29.47%(2 yr), and 12.13%(3 yr).

The minimum investment is ₹100.

Motilal Oswal Midcap 100 Exchange Traded Fund

Motilal Oswal Midcap 100 Exchange Traded Fund is a Motilal Oswal Mutual Fund House open-ended mid-cap equity plan.

In the last 6 months, its absolute return has been downed by –14.85%; under SEBI’s calculator, a very high-risk category. However, its performance history is hopeful.

Current NAV is ₹28.59, holding in large capital 9.18% ,mid-cap 67.73%. Top 3 holdings in Adani Gas, Tata power and Voltas.

The fund’s asset allocation is roughly 99.99% equities, 0.0% debts, and 0.01% cash and cash equivalents.

The fund invests across market capitalizations, with roughly 20.83% in gigantic and large size corporations and 79.17% in mid-cap companies.

Following the strategy, Motilal Oswal Midcap currently holds Assets under Management worth ₹92.35 cr, and the fund’s expense ratio is 0.2%.

Annualized returns yielding in different periods are:10.32%(1 yr),44.11%(2 yr), and 18.33%( 3 yr).

The minimum investment is ₹500.

2. Best bond ETF of India in 2022 —

Nippon ETF Liquid BeES

Nippon India ETF Liquid BeES is a Nippon India Mutual Fund House Open-ended Liquid Debt plan.

Last 6 months, its absolute return was up by 1.08%; under SEBI’s calculator, a low-risk category. Its performance history has been hopeful for 10 yr.

Nippon India ETF Liquid BeES targets to offer current income to investors along with high liquidity and low risk by investing in a portfolio that consists of Repo and Reverse Repo/CBLO.

The current NAV is ₹1,000; it has a 0.01-year average maturity and a null year duration.

The fund will only declare a dividend if the scheme’s NAV exceeds its face value.

Nippon ETF liquid BeES holds Assets under Management worth ₹ 4417.57 cr, with the fund’s expense ratio being 0.65%.

Annualized returns yielding in different time periods are 8.65%( 1yr), 31.04%(2yr), and 13.48%(3yr).

The minimum investment required is ₹ 1,00,000.

Nifty Bharat Bond

The scheme’s investment goal is to replicate the Nifty BHARAT Bond Index – April 2023 by investing in bonds issued by CPSEs, CPSUs, CPFIs, and other government entities, subject to tracking errors.

It holds low-risk securities by 96% of the portfolio. The new bond is performing well.

In the last 6 months, its growth was 1.07% and has grown since its inception. This fund is considered a lower risk category.

Nifty Bharat Bond holds Assets under Management worth ₹ 6,439 cr with an expense ratio of 0.0005%, top 3 holdings in Indian Railway Finance Corporation, Housing & Urban Development Corporation, and Power Finance Corporation.

Annualized returns yielding in different time periods are 3.26%(1 yr), 5.81%(2 yr), and 6.61%( since Dec 2019).

The minimum investment required is ₹ 1000.

3. Best commodity ETF of India in 2022—

Nippon India ETF Gold BeES

ETF of Nippon India Mutual Fund House’s Gold BeES is an open-ended gold commodity strategy. By investing in physical gold, the fund strives to deliver returns that closely match those provided by the price of gold.

According to the scheme’s description, a minimum of 95% of assets will be allocated to gold-related and physical gold instruments, with the remaining 5% dedicated to money market instruments.

Present NAV is ₹43.31; the last 6 months’ growth is 5.44%, the best performance was in Sept 2008 with the growth of 27.62%, worst performing month was Oct 2008, dipped by 20.96%.

It holds Assets under Management worth ₹ 6814.29 cr with an expense ratio of 0.7%.

Annualized returns yielding in different time periods are : 4.18%( 1yr), 15.25% (3 yr), 11.06% (5 yr).

The minimum investment required is ₹ 10,000.

Invesco India Gold ETF

By investing in physical gold, the fund strives to deliver returns that closely match those provided by the price of gold.

The current NAV is ₹4470.9, the last 6-month growth is .01%, and under SEBI’s calculator, it is under the high-risk category, with 98.1% holdings in gold.

This fund showed the best performance with  50.93% returns between May-2019 – May-2020, and the worst performance stuck –20.84% between Aug-2013 and Aug-2014.

It holds Assets under Management worth ₹88.73 cr, with the fund’s expense ratio being 0.55%.

Annualized returns yielding in different time periods are: 4.68% (1 yr), 15.74% (3 yr), 11.26% (5 yr).

The minimum investment required is ₹5000.

4. Best sectoral ETF of India in 2022—

Kotak NV 20 ETF

Subject to tracking errors, the program aims to generate returns before expenditures that nearly match total stock returns as represented by the NV 20 Index.

The fund had the highest growth of 93.90% from Mar-2020 to Mar-2021 and the lowest negative growth -29.00% between Mar-2019 to Mar-2020.

The current NAV is ₹ 90.64, and the last 6 months’ performance hit –7.83%; under SEBI’s calculator, it is under the high-risk category. The top holdings are TCS, Infosys, HUL, ITC, and L&T.

Assets under Management worth ₹ 32.34 cr with an expense ratio of 0.14%, large capital investment is 99.88%, and mid-cap investment is 0%.

Annualized returns yielding in different time periods are: 12.76%(1 yr), 37.40% (2 yr), 17.29% (3 yr), 17.12%( 5yr).

The minimum investment required is ₹ 5000.

ICICI Prudential NV20 ETF

Subject to tracking faults, the scheme aims to generate returns before expenses that nearly match the total return of the underlying index.

The fund’s asset allocation is roughly 99.87% equities, 0.0% debts, and 0.13% cash and cash equivalents. Holdings in large capital are 99.86%, led by Wipro, TCS, Tech Mahindra, and Infosys.

The current NAV is ₹ 88.99, and the last 6 months’ growth was –7.81%; as per SEBI’s regulations, it is under high risk. This fund had the best return history of 92.48% from Mar-2020 to Mar-2021            and the worst performance of -28.23% from Mar-2019 to Mar-2020.

It holds Assets under Management worth ₹40.91 cr with an expense ratio of 0.12%.

Annualized returns yielding in different time periods are 17.34%(3 yr), 16.77%(5 yr), and 16.45%( since inception ).

The minimum investment required is ₹5000.

Final thoughts

It’s no surprise that ETFs have grown in popularity in a short time due to their high liquidity, risk minimization, minimal expenses, and simple trading system. ETFs will expand their asset base as demand grows, increasing liquidity. The asset is meant to monitor a group of listed securities. ETFs have evolved into a convenient and favored method of gaining market exposure for many investors. It has enabled investors to easily access whole stock markets in other nations and sectors.

It’s crucial to note that just because an ETF has multiple underlying positions doesn’t imply it’s immune to volatility. The fund’s scope will determine the likelihood of significant fluctuations.

Read Also| Best Mutual Funds to Invest in 2022 for Long Term.

FAQs |

What is the disadvantage of ETF?

Lower dividend yields, poor diversification, and tracking error can create a problem. Although the commission paid to the broker may be the same in stock and ETF, the stock does not have a management charge.

Do you have to pay Tax for ETF?

10% in excess of INR 1,00,000 under Section 112A.

How much time do you have to invest in ETF?

A short-term capital gain occurs when you own ETF shares for less than a year. A long-term capital gain occurs when you hold ETF shares for more than a year.

Can I take money out of ETF anytime?

ETF can be bought and sold during market hours like a stock.

When should you sell ETF?

Suppose your ETF has made a 10% gain. Should you sell it if it loses 10% of its value? If you can’t afford a 10% loss on your portfolio, you shouldn’t take that 10% risk. It would be best if you did not play the risk with a credit loan.

Is ETF a better option than Mutual Fund?

Both can track indexes, but ETFs are more cost-effective and liquid because they trade on stock markets like shares of stock. ETF has a lower operating cost and no minimum investment bar. Mutual funds have more tax slaps than ETFs. ETFs can be bought and sold on the stock exchange at the current market price.
But during buying or selling mutual fund shares, transaction fees are typically nil when compared to ETFs.

Which ETF pays the highest dividend?

This article will help you decide on the best ETF fund to invest India in 2022. Recommended funds are subject to either minimum or moderate market risk. It will help you to decide on the top ETF funds to invest 2022.

Disclaimer
All the information are used for education purpose only. Investing in mutual funds poses a risk of financial losses. Investors must therefore exercise due caution. InvestoAxis is not liable or responsible for any losses caused as a result of decisions based on the article.

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