ETFs trade on-exchange like stocks (live prices, need demat, watch tracking error + liquidity). Index funds are mutual funds at end-of-day NAV with clean SIP automation and no bid-ask spread.
Rule of thumb
- Monthly SIP investor → index fund (automation wins) — run the numbers on our SIP calculator, and see which platforms sell the plan directly in the app comparison.
- Tactical/lumpsum buyer comfortable with limit orders → liquid ETFs (e.g., Nifty 50 ETFs) — compare the actual schemes, costs and returns in the fund screener.
- Expense ratios are similar now — liquidity and convenience decide. The expense-ratio entry explains what that number actually buys you.
Educational content, not financial advice.
| Index fund | ETF | |
|---|---|---|
| How you buy | Auto-debit or SIP at end-of-day NAV | Market or limit order during market hours |
| Needs a demat account | No | Yes |
| SIP automation | Native — set once | Manual, or via the broker's own plan |
| Price you get | Closing NAV, published at end of day | Live market price, with a bid-ask spread |
| Minimum buy | Often ₹10–₹500 | One unit — most ETFs trade near ₹100 |
| Tracking error | Usually lower | Higher for less liquid funds; watch the volume |
| Best for | Monthly investors and first-time buyers | One-off buyers who want control of the entry price |
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