Are exchange-traded funds same as index funds?

No. The exchange-traded funds are not the same as index funds. The ETFs are low-cost and tax-efficient investments which invest in stocks, commodities, bonds, etc. directly. However, index funds are very similar to high-cost mutual funds and these are always traded through a fund manager to ensure the functioning is not impacted.

• ETFs track the index of a specific exchange while index funds replicate the performance of the benchmark market index.
• ETFs are traded like stocks while index funds are treated as mutual funds.
• The pricing of ETFs is based on the demand and supply in the market while index funds are purchased on the basis of NAV of the underlying assets.