Best ETF in India: A Complete Guide for Beginners
Introduction
If you’ve ever tried to balance savings and investments, you know how confusing the world of the stock market can feel. Mutual funds, stocks, bonds, SIPs—and then ETFs. But here’s the thing: Exchange Traded Funds (ETFs) are like a basket of fruits. Instead of buying apples, bananas, and oranges one by one, you can buy the entire basket at once. Simple, right?
In this article, we will break down everything you need to know about the best ETF in India, how to pick the right one for your goals, and why ETFs are becoming the preferred choice for both new and experienced investors. We’ll also link this to stock market courses in Delhi that can help you become a smart investor.
Discover the best ETF in India and the best ETF to invest in India. Learn smart investing tips and stock market courses in Delhi for better trading decisions.
What is an ETF and How Does it Work?
An Exchange Traded Fund (ETF) is like a hybrid between a stock and a mutual fund. It trades on the stock exchange just like shares, but instead of being a single company’s stock, it represents a collection of stocks, bonds, or commodities. For example, if you buy a Nifty 50 ETF, you are automatically invested in the top 50 companies of India without buying them individually.
It’s like ordering a “combo meal” at McDonald’s instead of buying a burger, fries, and coke separately.
Why Choose ETFs Over Mutual Funds?
Many people wonder: Why not just stick with mutual funds?
Here’s the difference:
- Mutual funds are actively managed, meaning a fund manager decides what goes into them.
- ETFs are usually passively managed, tracking an index (like Nifty 50 or Sensex), making them more cost-efficient.
Key Advantage: Lower expense ratio and better transparency.
Benefits of Investing in ETFs
- Low Cost: ETFs have some of the lowest fees in the investment world.
- Liquidity: Can be bought and sold throughout the trading day.
- Diversification: Reduces the risk of relying on a single stock.
- Transparency: Prices are updated live as they trade like stocks.
- Flexibility: You can start with as little as one unit.
Risks to Consider Before Investing in ETFs
Every coin has two sides, and so do ETFs.
- Market risk (they fall when the index falls).
- Tracking error (ETF performance may not perfectly match the index).
- Liquidity risk (some ETFs don’t trade actively).
Types of ETFs in India
- Equity ETFs (track stock indices like Nifty/Sensex).
- Debt ETFs (invest in bonds or government securities).
- Gold ETFs (track gold prices).
- International ETFs (invest in U.S. or global companies).
- Sector ETFs (focus on sectors like IT, Pharma, Banks).
Criteria to Select the Best ETF in India
When searching for the best ETF in India, use these filters:
- Expense ratio: Lower is better.
- Liquidity: Higher trading volume ensures easy buying/selling.
- Tracking error: Small differences from index are preferred.
- Fund size (AUM): A bigger fund usually means stability.
Top-performing ETFs in India 2025
- Nippon India ETF Nifty BeES
- HDFC Sensex ETF
- ICICI Prudential Nifty 50 ETF
- UTI Nifty Next 50 ETF
- SBI ETF IT (sector-based)
- Kotak Gold ETF
These are considered among the best ETFs to invest in India due to their past performance, liquidity, and low fees.
Best ETF to Invest in India for Beginners
If you’re just starting, Nifty 50 and Sensex ETFs are great options. They are stable, highly liquid, and represent India’s strongest companies.
Think of it as buying a ticket to India’s economic growth journey.
Sector-specific ETFs in India
Want to focus on one booming sector? Sector ETFs like SBI ETF IT or Nippon PSU Bank ETF help you target industries. If IT or banking grows, your ETF grows with it.
Gold ETFs: A Safe Haven for Investors
Gold ETFs are best for safety-first investors. In tough times, gold usually shines brighter than equities. Instead of buying physical gold, you can invest in Gold ETFs and avoid storage hassles.
International ETFs Available in India
With Motilal Oswal Nasdaq 100 ETF or Motilal Oswal S&P 500 ETF, Indian investors can get exposure to big global companies like Apple, Microsoft, Amazon.
Taxation on ETFs in India
- Equity ETFs: Same as equity shares (15% short-term, 10% long-term above ₹1 lakh).
- Debt & Gold ETFs: Taxed like debt funds (20% with indexation if held over 3 years).
How to Buy and Sell ETFs in India
Buying an ETF is just like buying a stock. Steps include:
- Open a Demat account.
- Search for desired ETF (e.g., Nifty BeES).
- Place buy order through your broker app (Zerodha, Upstox, Groww, etc.).
- Sell anytime during market hours.
Role of Stock Market Courses in Delhi
If you’re serious about investing, consider joining stock market courses in Delhi. They help you understand:
- Technical analysis
- ETF strategies
- Risk management
- Long-term portfolio building
Good institutions include IIFM, Trendy Traders Academy, and local training academies. Think of these courses as driving lessons. ETFs are the car, but you need to learn to drive it safely.
Final Thoughts and Investment Tips
ETFs are one of the smartest and simplest ways to invest in India. They combine the safety of diversification with the flexibility of stocks. Whether you are a beginner or an advanced trader, choosing the best ETF in India depends on your risk appetite and goals.
Like a well-packed lunchbox, an ETF helps you enjoy a balanced meal of investments without the hassle of managing each item separately.
FAQs
1. Which is the best ETF to invest in India in 2025?
The Nifty 50 and Sensex ETFs are considered the safest and strongest options for most investors.
2. Are ETFs safer than mutual funds?
ETFs offer lower expense ratios and better transparency, but both carry market risks.
3. Can beginners start with ETFs in India?
Yes, ETFs like Nifty 50 ETF are perfect for beginners due to simplicity and lower costs.
4. Do I need a Demat account to buy ETFs?
Yes, ETFs are traded on stock exchanges and require a Demat account.
5. Which are the best stock market courses in Delhi for ETF strategies?
Institutions like Trendy Traders Academy, IIFM, and Delhi-based trading academies offer specialized ETF investment training.
