How to trade and invest in ETFs

Investing in ETFs (Exchange Traded Funds) is considered a very smart decision these days because they have a very low expense ratio.

Here is a list of some of the best ETFs based on market trends and liquidity (ease of buying and selling) for 2025:

1. Broad Market ETFs (Safe and Suitable for long-Term Investment)

These ETFs invest in India’s top 50 or 100 companies. If the Indian economy grows, these ETFs will also grow.

• Nippon India ETF Nifty 50 BeES (NIFTYBEES): This is India’s oldest and most liquid ETF. It has a very high trading volume.
• SBI Nifty 50 ETF: Being a government-owned fund house, it has a very large asset base and a very low tracking error (margin of error).
• ICICI Prudential Nifty 50 ETF: This ETF has a very low expense ratio (approximately 0.02%).

2. Sectoral and Thematic ETFs (Potential for Higher Returns)

These funds invest in specific sectors such as banking, IT, or government companies. They carry a slightly higher risk, but can also offer better returns.

• Nippon India ETF Bank BeES (BANKBEES): The best option for the banking sector.
• CPSE ETF: This invests in government-owned companies (such as ONGC, NTPC). It has given excellent returns in the last 1-2 years.
• Nippon India ETF Nifty IT (ITBEES): If you want to invest in leading IT sector companies (such as TCS, Infosys).

3. Commodities (Gold and Silver)

These are good options for protecting against inflation and safeguarding your portfolio.

• Nippon India ETF Gold BeES (GOLDBEES): It is much easier to hold and sell compared to physical gold.
• Nippon India Silver ETF (SILVERBEES): The most popular option for investing in silver.

4. International ETFs (Global Diversity)

• Motilal Oswal NASDAQ 100 ETF (MON100): If you want to invest in American companies like Apple, Microsoft, and Google.

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Keep these 3 things in mind when choosing an ETF:

1. Liquidity: Always choose an ETF with high trading volume so you can sell it quickly whenever you want.
2. Expense Ratio: The lower it is, the higher your profits will be.
3. Tracking Error: The lower this value, the more accurately it will follow its index (such as Nifty).

My advice: If you’re just starting out, it would be safest to begin with NIFTYBEES and BANKBEES.

Sectoral Index Trading and Investment

If you’re considering investing in a specific sector, here’s some information on major sectoral ETFs in India. Investing in a sector can be beneficial if you believe that particular industry (such as banking or defense) will perform very well in the coming months or years.

List of major sectoral ETFs:

1. Banking Sector

Banking is the backbone of the Indian economy.

• Nippon India ETF Bank BeES (BANKBEES): This invests in top banks like HDFC, ICICI, and SBI.
• Kotak Nifty PSU Bank ETF: If you want to invest exclusively in public sector banks (such as SBI, PNB, BOB).

2. IT Sector ETF

This sector is known for global demand and digital growth.

• Nippon India ETF Nifty IT (ITBEES): This includes leading companies such as TCS, Infosys, and HCL Tech.
• ICICI Prudential IT ETF: A good option with a low expense ratio.

3. CPSE/PSU Sector

This sector has given the highest returns in the last 1-2 years.

• CPSE ETF: This invests in government-owned companies in the power, oil, and heavy industries sectors (such as NTPC, ONGC, and Coal India).
• Bharat 22 ETF: This includes government companies as well as some selected private companies (such as L&T and ITC).

4. Auto & Consumption Sector

• Nippon India ETF Nifty Auto: If you believe that the demand for electric vehicles and automobiles will increase (Tata Motors, Mahindra, Maruti).
• ICICI Prudential Nifty FMCG ETF: Companies in the fast-moving consumer goods sector such as HUL, ITC, and Nestle. This sector performs well when the market is declining (Defensive Sector).

5. Healthcare and Pharma Sector

• ICICI Prudential Nifty FMCG ETF: Companies in the fast-moving consumer goods sector such as HUL, ITC, and Nestle. This sector performs well when the market is declining (Defensive Sector).

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Comparison: Which sector is right for you?

Sector	Risk	Potential Return	Why Choose This?
Banking	Moderate	High	To grow along with India’s overall economic growth.
IT	Moderate	Stable	For global exposure and to benefit from a stronger Dollar.
CPSE/PSU	High	Very High	For government dividends and infrastructure growth.
FMCG	Low	Steady	To protect your portfolio during a recession/market downturn.

Tip: Don’t invest all your money in sectoral ETFs. Allocate only 15-20% of your portfolio to sectoral funds, and invest the rest in broad indices like the Nifty 50.