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ETF means Exchange Traded Funds are actually the mutual fund schemes that are traded on an exchange just like stocks. ETF holds an investment in the same securities of its underlying exchange. For instance, HDFC Nifty ETF’s portfolio will have an investment in Nifty constituents. At Zerodha, the broker allows investment in ETF at minimum brokerage charges.
Zerodha ETF charges are the same as of delivery-based trades however, an ETF is not a security, therefore, no STT (Security transaction tax) is levied by the discount brokerage firm.
Passive investors who don’t want to take high risks but looking to invest in the stock market can enter through ETF funds as they held an investment in exchange constituents. Risk-averse investors can enter through Sensex or Nifty ETF which is a large-cap index, however, risk-takers can choose to invest in Midcap or small-cap index ETF.