Introduction

Differences between ETFs and Active Mutual Fund Scheme Parameter Exchange Traded Fund Active Mutual Fund Scheme Trading Listed and traded on exchange just like stocks Open ended mutual funds are usually not listed on exchange Transaction Price Can be bought and sold at live Nav (iNAV), hence investor can use intra-day market movement Open ended mutual funds are bought and sold only at day closing NAV Returns Objective Aims to generate returns which are similar to the benchmark Index Aims to generate returns based on fund managers skill and view & aims to outperform the benchmark Index Portfolio Replicates the portfolio of the benchmark Index Portfolio is created based on fund manager view, within the investment objective of the fund Cost Lower cost since active management of the portfolio is not required Average expense ratio of Nifty 50 ETFs is 0.08%*1 Active management of portfolio etc. leads to higher cost Average expense ratio of large funds is 2.2% (Regular)*2 Exit Load No Exit Load Can have Exit Load

^{*Source: ACE MF. *1 Average of 17 NIFTY 50 ETFs. *2 Average of 28 large cap funds Regular plan (Growth). Behaviour of Plain vanilla ETFs and open ended mutual funds are explained in this note. As on Jun 30, 2020.}