TIPS FROM TOP : 'ETFs & SUSTAINABLE INVESTING' by Mr. Sivananth Ramachandran, Director, Morningstar Indexes
Wealth is the ability to fully experience
life – Henry David Thoreau
The role of money is very important in
today’s world. Majority of the people do
not have adequate money at the right time when they require it the most. To
hedge this unpredictability, one must learn how to invest smartly. Most of the
people invest in the mutual funds but with time there are many other investment
products prevailing in the market gaining people’s attention.
The Students of IIT Kanpur were fortunate
enough to get a chance to learn about other investment options specifically
Exchange Traded funds when DIME IIT Kanpur hosted Mr. Sivananth Ramachandran, Director
of Morningstar Indexes under its Corporate Seminar series on 11th August
2018. Mr. Sivananth is an IIM Lucknow
pass out and has over 11 years of experience in the investment industry. He
mainly deals in new products development at Morningstar. Mr. Sivananth in his
session explained about Exchange-Traded Fund, which is a hybrid investment
product. An ETF, or exchange-traded fund, is a marketable security that tracks
an index, a commodity, bonds, or a basket of assets like an index fund. Unlike
mutual funds, an ETF trades like a common stock on a stock exchange. He
discussed the differences between a mutual fund and exchange-traded fund and
how the landscape of ETF‘s have evolved from the past. Mr. Sivananth explained
in-detail working and stakeholders of mutual funds as well as ETFs. While explaining the same, he said that the
working of ETFs and mutual funds are similar in India, unlike the US. ETFs are
more efficient due to in-kind transactions as compared to mutual funds. While
talking about tracking error, he said that amount by which the ETF performance
lags or exceeds with respect to the underlying benchmark index directs to
tracking error. While walking us through the applications of ETFs, he explained
long-term as well as short-term applications of ETFs. At last, he spelled out
the issues related to ETFs which included specific as well as in broader
perspectives.
This session by Mr. Sivananth gave us the
overall panorama of the investment industry and which will definitely help us
in the future.
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