Best ETF in India: A Complete Guide for Investors

Introduction

Have you ever wondered if there’s an easier way to invest in the stock market without spending hours tracking individual stocks? That’s exactly where Exchange Traded Funds (ETFs) come in. Think of ETFs as a basket of different stocks or assets bundled together—just like a thali at your favorite restaurant. Instead of ordering multiple dishes separately, you get everything in one plate. Similarly, with an ETF, you gain exposure to multiple stocks with a single investment.

In this article, we’ll break down the best ETF in India, discuss why they are great investment options, and how they can fit into your financial plan. Whether you’re a first-time investor or someone looking for diversification, this guide will give you everything you need, explained in simple terms.

Discover the best ETF in India, learn the best ETF to invest in, and explore online stock market courses to start your investing journey.

What is an ETF?

An Exchange Traded Fund (ETF) is an investment fund that pools money from many investors and invests in multiple securities like stocks, bonds, gold, or international markets. Unlike mutual funds, ETFs trade on stock exchanges just like regular shares.

Why Invest in ETFs in India?

Diversification: Instead of betting on one stock, you get exposure to multiple companies.
Low Costs: ETFs usually have lower expense ratios compared to active mutual funds.
Liquidity: Since they are traded on stock exchanges, buying or selling them is simple.
Transparency: You know exactly what’s inside the ETF since holdings are published daily.

Types of ETFs Available in India

Equity ETFs – Track stock market indices like Nifty 50 or Sensex.
Gold ETFs – Invest in gold without physically owning it.
Bond ETFs – Invest in government or corporate bonds.
International ETFs – Provide exposure to foreign markets like US, Europe, or Asia-Pacific.
Sector ETFs – Focus on specific sectors like IT, Pharma, or Banking.

Key Benefits of Investing in ETFs

Easy way to participate in the stock market.
Can start with small investments.
Provide flexibility to trade anytime.
Help build a balanced portfolio.

Factors to Consider Before Choosing an ETF

Tracking Error: How closely the ETF follows its benchmark.
Expense Ratio: Lower is better.
Liquidity: ETFS with higher volume are easier to buy/sell.
Performance History: Check returns over at least 3-5 years.

Best ETF in India for 2025

Here are some of the top-performing ETFs that are considered the best ETF in India right now:

Nippon India ETF Nifty BeES – Tracks Nifty 50 index.
SBI ETF Nifty Bank – Great for exposure to the banking sector.
HDFC Gold ETF – Best for gold investment.
Mirae Asset NYSE FANG+ ETF – Gives exposure to US tech giants like Amazon, Google, and Apple.
ICICI Prudential Sensex ETF – Tracks the 30 biggest companies in India.

Best ETF to Invest for Beginners

If you are new, start with broad market ETFs like:

Nippon India ETF Nifty BeES – Simple and affordable.
ICICI Prudential Sensex ETF – Covers India’s top blue-chip companies.

These ETFs are stable, diversified, and easy to understand.

Sector-Specific ETFs in India

SBI ETF Nifty Bank – Banking exposure.
ICICI Prudential IT ETF – IT companies like Infosys, TCS, and Wipro.
Nippon India ETF Pharma BeES – Focuses on pharma stocks.

Gold ETFs vs Equity ETFs – Which One to Choose?

Gold ETFs help protect against inflation and market crashes.
Equity ETFs offer higher returns but carry more risk.

Most smart investors keep a mix of both in their portfolio.

ETFs vs Mutual Funds – The Real Difference

Feature	ETFs	Mutual Funds
Trading	Traded on exchange	NAV-based purchase
Cost	Lower expense ratio	Higher fees
Transparency	Daily disclosure	Monthly/quarterly
Liquidity	High	Moderate

How to Buy an ETF in India?

Open a Demat account with brokers like Zerodha, Upstox, or Groww.
Log in to the stock market app.
Search for the ETF name or symbol.
Place a buy order just like buying a stock.

Costs and Taxation of ETFs

Expense Ratio: Ranges from 0.05% to 0.50%.
Capital Gains Tax: Same as equity taxation.
- Less than 1 year = 15% Short-Term Capital Gains (STCG).
- More than 1 year = 10% Long-Term Capital Gains (LTCG) above ₹1 lakh.

Role of ETFs in Long-Term Wealth Creation

ETFs are ideal for long-term investors because they provide:

Steady compounded growth.
Reduced risk through diversification.
Consistent wealth creation similar to index funds.

Common Mistakes to Avoid While Investing in ETFs

Chasing only recent performers.
Ignoring liquidity.
Not diversifying between equity and gold ETFs.
Overtrading instead of long-term holding.

Online Stock Market Courses for ETF Learning

If you’re serious about learning, here are some recommended online stock market courses:

Trendy Traders Academy – Beginner friendly.
Coursera – Financial Markets by Yale University.
Udemy Stock Market Investing for Beginners.
Zerodha Varsity (Free) – Great for practical knowledge.

Conclusion

ETFs offer a powerful way to invest in India’s growing markets. Whether you’re a beginner exploring the best ETF to invest in or an experienced investor looking at sector-specific opportunities, ETFs give you diversification, cost-effectiveness, and long-term growth potential. Pair this with the right online stock market course, and you’ll be on your way to becoming a knowledgeable investor.

FAQs

Which is the best ETF in India for beginners?
The Nippon India ETF Nifty BeES and ICICI Prudential Sensex ETF are considered best for beginners due to simplicity and stability.
Are ETFs better than mutual funds?
ETFs generally have lower costs and more trading flexibility, while mutual funds are better for those who prefer a passive, SIP-style investment.
Can I invest in ETFs without a Demat account?
No, a Demat account is required since ETFs are traded on stock exchanges.
Which ETF is good for long-term investment?
Broad-based ETFs like Nifty 50 or Sensex ETFs are best suited for long-term wealth creation.
Should I invest in Gold ETFs or Equity ETFs?
A smart portfolio usually includes both—gold for stability and equity for growth.