I've heard many arguments here about ETF's and liquidity etc. I think they are genuine concerns and needs to be looked into with a little more depth.
I've taken six ETF's here - one's that I have currently invested in. I prefer ETF's to mutual funds as I get to track their history in a Google Sheet and current values compared to Mutual Funds.
Also, with lower Expense Ratios, I find that ETF's are cheaper than equivalent Mutual Funds (even if you include AMC). I will consider Zerodha here (~Rs. 400 AMC).
The six funds I am considering here are:
NIFTYBEES - Best liquidity - Heavy trading volumes. This ETF has been active since 2002(I was a kid back then) and there is excellent history on this.
JUNIORBEES - Lower than NIFTYBEES but adequate
UTINIFTETF - Lowish volumes - Difficult to sell large blocks of shares.
Average volume in 2020 is 14,653 shares per day * Current Price (Rs. 990) = Rs. 1,45,06,470. If you wanted to sell 1cr. worth of shares it would be difficult. But, for a buy and hold investor, I would sell may be 100-1000 shares a day. No problem for this ETF.
UTINEXT50 - Average volume in 2020 is 89,000 shares * Rs. 245 per share = Rs. 2,18,05,000. Again, selling chunks would not be a huge deal.
NETFLTGILT - Average volume in 2020 is 4,20,7835 shares * Rs 21 per share = 8,83,64,535.
ICICI500 - Average volume in 2020 is 32,92,468 shares * Rs. 123 per share = Rs. 40,49,73,564. https://imgur.com/Rti1BbK
ETF Volumes over time - All normalized to 500,000 shares.
I'm not a rich guy, but these are large chunks of money to me. If you are a buy and hold investor, I don't see why investing in ETF's are an issue.
When it comes to expense ratios, I find that ETF's are cheaper than their equivalent mutual funds.
Here is the proof. This includes only equity ETF's. Total Expense Ratio (MF vs ETF)
I used Google Sheets to pull all this data from GOOGLEFINANCE.
So, can someone explain to me why they think ETF's have low liquidity? Why ETF's cost more than Mutual Funds?
PS: I am not going to go to Creation Units and how market makers "add" liquidity when there is extreme redemption pressure etc. But, here is a link to Vanguard's explanation.
I've taken six ETF's here - one's that I have currently invested in. I prefer ETF's to mutual funds as I get to track their history in a Google Sheet and current values compared to Mutual Funds.
Also, with lower Expense Ratios, I find that ETF's are cheaper than equivalent Mutual Funds (even if you include AMC). I will consider Zerodha here (~Rs. 400 AMC).
The six funds I am considering here are:
NIFTYBEES - Best liquidity - Heavy trading volumes. This ETF has been active since 2002(I was a kid back then) and there is excellent history on this.
JUNIORBEES - Lower than NIFTYBEES but adequate
UTINIFTETF - Lowish volumes - Difficult to sell large blocks of shares.
Average volume in 2020 is 14,653 shares per day * Current Price (Rs. 990) = Rs. 1,45,06,470. If you wanted to sell 1cr. worth of shares it would be difficult. But, for a buy and hold investor, I would sell may be 100-1000 shares a day. No problem for this ETF.
UTINEXT50 - Average volume in 2020 is 89,000 shares * Rs. 245 per share = Rs. 2,18,05,000. Again, selling chunks would not be a huge deal.
NETFLTGILT - Average volume in 2020 is 4,20,7835 shares * Rs 21 per share = 8,83,64,535.
ICICI500 - Average volume in 2020 is 32,92,468 shares * Rs. 123 per share = Rs. 40,49,73,564. https://imgur.com/Rti1BbK
ETF Volumes over time - All normalized to 500,000 shares.
I'm not a rich guy, but these are large chunks of money to me. If you are a buy and hold investor, I don't see why investing in ETF's are an issue.
When it comes to expense ratios, I find that ETF's are cheaper than their equivalent mutual funds.
Here is the proof. This includes only equity ETF's. Total Expense Ratio (MF vs ETF)
I used Google Sheets to pull all this data from GOOGLEFINANCE.
So, can someone explain to me why they think ETF's have low liquidity? Why ETF's cost more than Mutual Funds?
PS: I am not going to go to Creation Units and how market makers "add" liquidity when there is extreme redemption pressure etc. But, here is a link to Vanguard's explanation.