Can I invest in ETFs through Niyo Wealth?
Hi Maria, not as of now. We only deal in Mutual Funds. We will let you know if and when we introduce ETFs. Hope this helps!
Let me just brief a little bit on how ETFs work. ETF refer to Exchange Traded Funds. This is not a traditional form of Mutual Fund where the Asset Management Company (AMC) creates units & sells it to public for cash.
ETF units are created in blocks based on the “Portfolio Deposit” i.e. shares of companies received which comprises of the index from various categories of investors like authorized participants, large investors and institutions. The outstanding units of ETF is not limited but varies upon the deposits or withdrawals from the participants in “Portfolio Deposit”.
On creation of Block units these are issued to the participants who in turn sell it on the exchanges, where individual investors may purchase them just like any other shares. The redemption of the ETF units are generally done on the exchanges itself as Mutual Fund house/Asset Management Company (AMC) will have a pre-defined units in lot sizes for direct redemption which may not be feasible for individual investors.
Hence the liquidity of ETFs can be considerable less when compared to traditional form of Mutual Fund as it is majorly dependent on the market demand for the ETF units & availability of underlying ETFs in the exchange.
Hope this helps