The difference between a banking sector fund and a bank ETF is that a bank ETF is a passive fund that invests similar to the CNX Bank Index compared to the banking sector fund which invests in stocks of companies engaged in the banking and financial services activities. As ETFs are passive funds, they have a lower expense ratio, which should not be the only criteria for fund selection. You should look for a fund that suits your investment needs and fits in with your financial plans and goals. A banking fund is a sector fund and these are risky in performance, make sure you understand the risks associated before investing in it.
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Also, know how to buy mutual funds online:
Invest in DSP BlackRock Mutual Funds Online
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Invest in Sundaram Mutual Funds Online
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Invest in L&T Mutual Funds Online
Invest in Edelweiss Mutual Funds Online