1. Price: It is the price of one unit of the ETF and the price fluctuations in real-time.
2. Liquidity: Liquidity is the ability to buy and sell the assets quickly. Liquidity is a significant part of what makes ETF funds accessible, manageable, and accurate. A large proportion of ETF trades take place between a bullish or bearish viewpoint and a liquidity provider. ETF's liquidity is based on the average daily traded value.
- High liquidity: Average daily traded value of the ETF is high
- Low liquidity: Average daily traded value of the ETF is low
- Medium liquidity: Average daily traded value of the ETF is medium
3. Expense Ratio: It is the amount companies charge investors to manage a mutual fund or exchange-traded fund (ETF). The expense ratio represents all of the management fees and operating costs of the fund.
If an average ETF carries an expense ratio of 0.30%, which means the fund will cost you ₹3 in annual fees for every ₹ 1,000 you invest.
4. Tracking Error: It is the difference between the returns of the index fund and the target index is known as a fund's tracking error. A large tracking error between a passively managed ETF and the index it tracks may be a red flag. It could signal excessive trading costs or issues relating to fund management.