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NISM Certifications · NISM-Series-V-A: Mutual Fund Distributors · Scheme Related Information

Which of the following is a defining feature of an Exchange Traded Fund (ETF)?

An Exchange Traded Fund's units are listed and traded on a stock exchange at prevailing market prices during trading hours. ETFs are generally passive, track an index and are held in demat form, unlike plain open-ended funds bought at end-of-day NAV.

  1. AUnits are traded on a stock exchange at market prices throughout the trading dayCorrect
  2. BUnits can be purchased from the AMC only at end-of-day NAV
  3. CIt is always actively managed to beat the index
  4. DIt cannot be held in demat form

Explanation

ETF units are listed and traded on stock exchanges at market prices during trading hours, and are held in demat form. Most ETFs are passively managed to track an index, not to beat it.

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