ETF (Exchange-Traded Fund)

Like an index fund, most ETFs track a market index at low cost - the key difference is how you buy them: an ETF trades continuously on a stock exchange at a live, fluctuating price during market hours, like any listed stock, whereas a regular mutual fund (including index funds) is bought/sold once a day at that day's NAV. This means an ETF requires a demat and trading account, unlike a regular mutual fund which can be bought directly. ETFs often carry marginally lower expense ratios than equivalent index mutual funds, but demand a bit more hands-on management (placing an actual buy/sell order) than a SIP into a regular fund.