Exchange traded funds (ETFs) are investment funds traded on stock exchanges like stocks. Most ETFs track an index such as a stock or bond index, holding assets like stocks, commodities, or bonds. ETFs may be attractive investments due to their low costs, tax efficiency, and stock-like features. While ETFs provide diversification and flexibility by being traded throughout the day, they also track narrow markets which can be volatile and lack long term track records.

1. UNIVERSITY OF
MYSORE
Capital Market Instruments
Topic: Exchange Treaded Funds
Presenting to,
Srinivas sir,
Faculty
Department of commerce,
Manasa gangotri,
Mysore.

3. Exchange traded funds
An exchange-traded fund (ETF) is an investment fund traded
on stock exchanges, much like stocks. An ETF holds assets
such as stocks, commodities, or bonds, and trades close to
its net asset value over the course of the trading day. Most
ETFs track an index, such as a stock index or bond index.
ETFs may be attractive as investments because of their low
costs, tax efficiency, and stock-like features. ETFs are the
most popular type of exchange-traded product.

4. Brief history of ETFs
◦ S&P Depository Receipts (Spiders) hit the market in
1993.
◦ In the past 12 months 252 new ETFs were launched
worldwide and assets increased globally by 46%.
◦ There are about 665 equity, bond, commodity, and
currency ETFs, with combined assets of $525 billion

5. What is an ETF? Two great investment ideas
brought together
ETFs
DiversifiedTradable
during the day
Diversified funds
that trade like
stocks
Mutual FundStock

6. Types of ETFs
Index ETFs
Stock ETFs
Bond ETFs
Commodity ETFs or ETCs
Currency ETFs or ETCs

7. Investment uses
Lower costs
Buying and selling flexibility
Tax efficiency
Market exposure and diversification
Transparency

8. Why are ETFs so popular?
Transparency • Investors know the ETF holdings, price and costs
Liquidity
• ETFs offer two sources of liquidity:
• Traditional liquidity measured by secondary market trading volume
• Multi dealer model boosts the liquidity of iShares ETFs
Diversification
• ETFs provide immediate exposure to a basket or group of securities
for instant diversification
• Broad range of asset classes including equities, bonds, commodities,
investment themes, etc
Flexibility
• ETFs are listed on exchanges and can be traded at any time the
market is open
• Pricing is continuous throughout the day
Cost effectiveness • ETFs offer a cost-effective route to diversified market exposure

9. Drawbacks of ETFs
Cannot use them to benefit from what you think may be an exceptional
manager.
Value can separate from NAV (Net Asset Value).
Some track narrow market sectors – can be very volatile.
Single country ETFs: (Singapore, Malaysia, Mexico, Brazil to name a few
popular ones presently) are posting double digit returns and investors
don’t realize they are assuming much higher risk (a handful of large
companies dominate these ETFs) ex: Brazil: Petroleo Brasileiro
Another example of this, iSHARES South Korea – 3 companies account for
1/3 of total assets.
Lack long term track records.

10. conclusion
It’s not always easy to do this kind of analysis, but
that’s my point. ETFs aren’t as easy as mutual funds. In
most cases they are better cheaper, more tax-efficient,
more liquid - but they come with complications.

11. Reference
Capital market institutions and instruments
Eastern Economic Edition 4TH edition
Page no : 247
by,
Frank j.fabozzi and franco modigliani
Internet source:
Wikipedia / exchange treaded fund

12. Presented by,
Mahadeva prasad.m
2nd sem MFM,
DOS in commerce,
Manasa gangotri,
Mysore.
Thanking you