NISM Certifications · NISM-Series-V-A: Mutual Fund Distributors · Scheme Related Information
Which of the following is a feature of an Exchange Traded Fund (ETF) that differs from a regular open-ended index fund?
An ETF is listed on a stock exchange, so investors buy and sell units during market hours at market prices through a broker and demat account. A regular index fund transacts with the AMC at end-of-day NAV. ETFs can track indices or gold.
- AUnits are bought from and sold to the AMC only at the end-of-day NAV by all investors
- BUnits are listed and traded on a stock exchange at market prices through a demat accountCorrect
- CETFs cannot track gold or indices
- DETFs are always close-ended with no liquidity
Explanation
ETF units are listed on stock exchanges and can be bought or sold during market hours at prevailing market prices, requiring a demat account and a broker. Direct creation and redemption with the AMC at NAV is generally limited to authorised participants and large investors. ETFs can track indices and gold, so the other statements are wrong.
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