Nifty ETF or Nifty 50 ETF refers to an ETF (Exchange Traded Fund) which invests in the stocks basket representing the Nifty 50. The Nifty 50 index comprises the largest Indian companies in terms of market capitalisation. Thus, by investing in Nifty ETF, investors can get exposure to these top companies by market cap and benefit from the diversification it offers across companies and sectors. A diversified portfolio reduces the risk, which is not offered in a single stock, where market fluctuations can impact the price of a stock negatively as compared to a basket of companies. The returns from the Nifty ETF would mimic the returns of the underlying index. A Demat account is required for investing in ETFs. Nifty ETF gives investors a flavour of equity investment for a small initial amount and at an extremely low cost.
