America The first choice of investors in is the exchange-traded fund (ETF). In January 2025, the US ETF came to an investment of $ 90.3 billion, the highest ever. At the same time, talk about India that there is a craze of mutual funds among investors. After all, what is it that people in America invest fiercely in ETFs. At the same time, in a mutual fund in India. Jirodha CEO Nitin Kamath has responded to this. Let us know what he has told.
What is the reason that ETF is popular in America?
In a post on X (East Twitter), Kamath reported that the ETF in the US is due to the ETF being popular. He reported that American mutual funds act as a pass-through vehicle, which means that they distribute capital gains to unit holders who have to pay tax on those benefits. This structure makes mutual funds a low tax saving product. On the other hand, ETFs use ‘In-Wind’ Creation and Redemption Mechanism. This process helps ETF investors to manage profit more efficiently, preventing the distribution of taxable capital gains to investors. Therefore, ETF becomes a better tax saving and earning investment product compared to mutual funds.
What is the situation in Indian?
Kamath said that in India, both mutual funds and ETFs do not directly put tax burden to the unit holders. It differs from Portfolio Management Services (PMS) and Category 3 Alternative Investment Fund (AIF), which pass tax. Despite this, investors’ interest in ETFs in India is increasing, especially in index-based investment. Data shows changes in investors’ priorities. Investors are moving towards cost-skilled, passive investment options.
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