Can ETFs Help Diversify Your Portfolio?

Exchange-traded funds (ETFs) are becoming popular among retail investors. These are passive funds that trade on the stock exchanges and can be bought and sold just like stocks. In a recent discussion with Kundan Kishore, deputy editor of Outlook Money, Chintan Haria, head of product development and strategy at ICICI Prudential Mutual Fund, and Vishal Dhawan, founder of Plan Ahead Wealth Advisors to explained how ETFs work and whether they are suitable for all kinds of investors. How Are ETFs Created? Haria explained how ETFs are created and how market makers have a role to play. “There is a market-making mechanism in which there is no natural buying or selling if you see multiple people trading on the stock exchanges. But for some ETFs, if there is no natural seller, there are only buyers, then it is the market maker or the authorised participant who will provide the liquidity on...