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Discover Exchange-Traded Products to learn how ETPs offer diversified market exposure through exchange-listed instruments.
Exchange-Traded Products (ETPs) are one of the most popular investment vehicles globally. They offer diversification, transparency, and relatively lower costs compared to many traditional investment structures.
Exchange-Traded Products (ETPs) are financial instruments that trade on stock exchanges, similar to shares.
They track an underlying asset, index, commodity, currency, or strategy.
Key features:
Bought and sold like stocks
Prices fluctuate throughout market hours
Designed to mirror the performance of an underlying benchmark
Lower cost than many actively managed funds
Common assets tracked by ETPs include equity indices (NIFTY 50, S&P 500), commodities (gold), bonds, and currencies.
ETPs are structured so that their market price closely follows the value of the underlying asset they track.
They function through:
Creation & Redemption Mechanism
Authorised Participants (APs) create or redeem ETP units to ensure price stability.
Underlying Benchmark Tracking
The ETP holds or synthetically replicates the assets it tracks.
Stock Exchange Trading
Investors buy/sell units directly through their brokerage accounts.
This mechanism keeps ETP prices efficient, transparent, and relatively low-cost for investors.
Here are the major categories of ETPs you’ll come across:
They track a range of underlying benchmarks such as stock indices, sectors, commodities, or bonds.
Unsecured debt instruments that aim to track the performance of a specified index and are subject to the credit risk of the issuing entity.
Provide exposure to commodity markets by replicating the performance of assets such as gold, silver, oil, or agricultural products.
Designed to provide amplified exposure (such as 2x or 3x) or inverse exposure to the underlying benchmark. These products generally carry higher risk due to their leverage and daily rebalancing structure.
Track global currencies or currency baskets.Their characteristics differ according to the underlying currencies and the methodology used to replicate them.
Here are the key benefits of Exchange-Traded Products (ETPs):
Gain exposure to multiple assets through a single product.
ETPs usually have lower expense ratios than mutual funds.
Trade anytime during stock market hours at available prices.
Holdings are often disclosed daily.
Invest in themes, sectors, commodities, or global markets effortlessly.
ETPs carry certain risks that depend on their structure, underlying assets, and market conditions, such as:
ETP prices move with their underlying asset.
Returns may slightly deviate from the index.
Low-volume ETPs can have wider spreads.
ETNs depend on the issuer’s financial health.
Designed for short-term trading, not long-term investing.
In India, ETPs include:
Equity ETFs (NIFTY 50, NIFTY Next 50, SENSEX)
Gold ETFs
Debt ETFs
International ETFs
Silver ETFs
The Bharat Bond ETF (popular government-backed debt ETF)
ETPs in India are regulated by SEBI and traded on NSE and BSE.
Exchange-Traded Products (ETPs) are convenient, transparent, and cost-efficient investment tools.
They offer investors access to diversified portfolios across asset classes with ease.
In summary:
ETPs trade like stocks
They track a wide range of underlying assets
They offer diversification and liquidity
Risks vary depending on structure (ETFs vs ETNs vs leveraged ETPs)
Traditional ETFs are structured to offer straightforward access to various asset classes while reflecting market performance.
This content is for informational purposes only and the same should not be construed as investment advice. Bajaj Finserv Direct Limited shall not be liable or responsible for any investment decision that you may take based on this content.
Exchange-traded products are marketable securities that trade on stock exchanges and are designed to track an underlying asset, index, commodity, or investment strategy.
Common types include Exchange-Traded Funds (ETFs), Exchange-Traded Notes (ETNs), Exchange-Traded Commodities (ETCs), leveraged ETPs, and currency-based ETPs, each offering different structures and exposures.
ETPs follow a specified benchmark and trade throughout the day like shares. They typically rely on a creation and redemption mechanism managed by authorised participants to keep prices aligned with net asset value.
Examples include Nifty 50 ETFs, Gold ETFs, Nasdaq-focused ETFs, crude oil ETPs, and currency ETPs that provide exposure to major global currencies.
Key benefits include lower costs, high transparency, intraday liquidity, and instant diversification across assets, sectors, or geographies.
Risks include market volatility, tracking error, liquidity challenges, issuer risk in the case of ETNs, and amplified price swings in leveraged ETPs.
ETPs trade intraday at market prices like individual stocks, while mutual funds transact only once per day at their Net Asset Value, making trading behaviour and liquidity characteristics different.
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