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Understanding ETFs Uses, Returns and Comparison with Mutual Funds and Stocks

 Exchange-Traded Funds (ETFs) have gained popularity among investors for their unique features and benefits. In this blog, we'll explore the uses of ETFs, their potential returns, how they differ from mutual funds and stock investments, and their safety profile. What is an ETF? An ETF is a type of investment fund that trades on stock exchanges, much like individual stocks. It holds a collection of assets, such as stocks, bonds, or commodities, and aims to track the performance of a specific index, sector, or asset class. Uses of ETFs Diversification : ETFs allow investors to gain exposure to a wide range of assets without having to purchase each individually. For instance, an ETF tracking the S&P 500 gives you exposure to 500 different stocks, reducing the risk associated with individual stock investments. Cost Efficiency : ETFs often have lower expense ratios compared to mutual funds. They typically pass on lower management costs to investors since they are often passively man
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Alliance / Merger / Consolidation


  • Alliance - Mutual agreement between companies to exchange or integrate business resources for mutual gain. Although they remain separate entities.
    • Advantage -
    •  i. To obtain market growth
    • ii. To construct broader business systems by linking a company's internal core competencies with the best of breed capabilities of its allies.   

  • Merger - Also known as amalgamation. Combination of two or more companies into a single company, where one survives with its name and other lose their corporate existence.
           

Types of Merger

  • Consolidation - Both companies lose their identity. A new third identity is created.

  • Acquisition or Take Over - Refers to the acquiring of a controlling stake in the ownership of a company by another entity. One company buy share capital of another company.

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