Things to watch out for when investing in ETFs

With actively-managed large-cap funds finding it difficult to beat the benchmark over the past few years, interest in passive investing is rising. The assets of index funds and exchange-traded funds (ETFs), the two alternatives for passive investing, account for close to 20% of the assets of total equity mutual funds as of October 2019 compared to less than 1% five years ago in November 2013, according to data from Value Research and Association of Mutual Funds in India (Amfi). Currently, there are 89 equity index funds and ETFs tracking the indices of both the National Stock Exchange (NSE) and BSE Ltd compared to around 40 in November 2013.