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Procedure: Opening an ETF
February 06 , 2013
  1. Exchange Traded Funds are open ended mutual funds. They're different from others because they listed on stock exchanges.
  2. They can be bought and sold like shares on the exchange and their NAVs change intra-day unlike mutual funds whose NAV is declared daily.
  1. If you do not have one already you need to open a demat account and trading account with a DP. Demat account holds your physical securities in the electronic form. Trading account is used to buy and sell shares and debentures.
  2. There is annual maintenance charge (a few hundred rupees every year), transaction charge (0.02% - 0.06%), one time account opening charge and so on associated with the accounts.
  3. Your demat account and trading account is linked to your bank account for transaction purpose and some banks may offer a 3-in-1 account of bank account, demat and trading account with a DP.
  4. You can refer to additional resources below for procedures on opening demat account and trading account.
  1. Once your demat account and trading account are ready, you can log in to your online trading account and look up the ETFs listed in NSE or BSE.
  2. Check price and buy units. Your demat account will show the units in 3-7 days after making payment. Similarly while selling if you get a higher price you can sell the units and the transaction will be effected in a few days time.
  3. Selling units before one year will make you liable to pay short term capital gains tax which is always higher than long term capital gains tax.

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