Which ETF to choose in 2024: A comprehensive guide to the best ETFs for diversifying your portfolio

Why ETFs Are the Right Choice in 2024

Exchange Traded Funds represent an increasingly popular investment tool among modern savers. Unlike traditional mutual funds, these products are traded on the stock exchange with the same ease as individual stocks, offering intraday liquidity and low costs. In 2024, investors looking to build a diversified portfolio have numerous ETF options to choose from, each with specific characteristics and risk profiles.

What Makes ETFs So Attractive

The structure of ETFs allows access to diversified portfolios of assets—stocks, bonds, commodities—without having to purchase them individually. Their particularly low expense ratios make them economical compared to traditional management, while the ability to enter and exit positions throughout the day offers flexibility without compromises. Combined with exposure to specific sectors, indices, or commodities, this feature has made ETFs a preferred choice for both individual investors and institutional managers.

Best ETFs 2024: Focus on the Indian Market

The Indian market offers a particularly wide selection of top ETFs to invest in during 2024. Here is a detailed analysis of the main available instruments:

Broad-Based Index ETFs

Nippon India Nifty 50 BeES represents the logical first step for those seeking a generalist exposure to the market. This fund tracks the Nifty 50 index, providing access to the 50 largest caps of the NSE across major sectors of the Indian economy.

• Symbol: NIFTYBEES
• NAV: Rs 241.63
• Expense ratio: 0.04%
• AUM: Rs 21,580 crore
• Market capitalization: Rs 22,606.36 crore
• Average volume: 20.49 lakh
• Risk profile: High
• Entry threshold: Rs 10,000

Historical returns show significant results: +12.1% annually, +44.25% over three years, +101.17% over five years. For those seeking broad diversification with minimal costs and high liquidity, this ETF is among the most solid available.

The value-oriented alternative is represented by the HDFC Nifty50 Value 20 ETF, which selects stocks trading at a discount to intrinsic value. With an NAV of Rs 123.29 and an expense ratio of 0.15%, the fund has generated +34.58% over the past year, +47.00% over three years, and +48.08% over five years. This instrument is particularly interesting for investors who believe in buyback opportunities at value.

Sector-Specific Bank ETFs

Those wishing to concentrate exposure on the financial sector have two relevant options: the PSU Bank BeES ETF (PSUBNKBEES) with an NAV of Rs 76.34 and the Nifty Bank BeES ETF (BANKBEES) with an NAV of Rs 471.90.

The first tracks the public banks index, showing particularly robust returns: +86.17% annually, +210.69% over three years, +120.81% over five years. Although the expense ratio is higher (0.49%), exposure to the Indian public banking sector has demonstrated interesting dynamics.

The second, the Nifty Bank ETF, includes the most liquid banking stocks with a moderate expense ratio of 0.19%. Returns have been +17.94% annually, +30.97% over three years, +56.87% over five years, reflecting a more contained but still positive performance.

Sector and Thematic ETFs in Innovative Sectors

The Bharat 22 ETF (ICICIB22) represents an interesting choice for investors seeking exposure to 22 blue-chip companies selected from various key sectors. With an NAV of Rs 96.10 and a expense ratio of 0.07%, the fund has generated +67.72% in one year, +167.61% over three years, +163.31% over five years. The AUM of Rs 16,624 crore reflects investor confidence in this instrument.

For those wanting access to global tech giants, the Mirae Asset NYSE FANG+ ETF (symbol FANG) tracks the eponymous index focused on leading technology companies. With an NAV of Rs 83.55 and a expense ratio of 0.66%, the fund has recorded +78.87% annual performance and +83.87% over three years, providing exposure to names like Facebook, Apple, Amazon, Netflix, and Google.

The UTI S&P BSE Sensex ETF (UTISENSETF) provides access to the 30 main market caps of India. With an NAV of Rs 784, a low expense ratio of 0.05%, and significant AUM of Rs 36,897 crore, the fund has generated +25.59% annually, +50.93% over three years, +96.76% over five years.

Commodity ETFs: Gold and Silver

Those wishing to allocate part of their portfolio to safe-haven assets can consider precious metals ETFs. The Nippon India Gold BeES ETF (GOLDBEES) with an NAV of Rs 55.54 offers exposure to gold price movements through physical backing. The expense ratio of 0.79% is offset by high liquidity (average volume 51.90 lakh) and performance of +12.38% annually, +44.61% over three years, +101.67% over five years.

The Invesco India Gold ETF (IVZINGOLD) represents an alternative with an NAV of Rs 5,852.88. With an expense ratio of 0.55% and AUM of Rs 97 crore, it has recorded +12.37% annually, +43.74% over three years, +104.88% over five years.

For investors interested in silver, the Nippon India Silver ETF (SILVERBEES) with an NAV of Rs 72.56 offers exposure to the metal via physical backing. The expense ratio of 0.51% allows access with a minimum threshold of just Rs 1,000, while the average volume of 74.96 lakh ensures good liquidity. The annual performance was +9.53%.

Choosing the Best ETF for Your Needs

The choice among the best ETFs in 2024 depends on specific objectives: those seeking broad diversification at very low cost should consider NIFTYBEES or UTISENSETF; those interested in value opportunities will find HDFCVALUE appealing; global tech exposure can be achieved through FANG; and those looking for inflation protection via commodities have solid options in GOLDBEES and SILVERBEES.

All these instruments combine daily liquidity, competitive costs, and diversified access to broad portfolios, characteristics that make ETFs essential choices for building a balanced wealth allocation in 2024.