Can You Do SIPs in ETFs? Here’s What You Need to Know

Systematic Investment Plans (SIPs) are a well-known method for disciplined investing, allowing you to invest a fixed amount regularly. Exchange-Traded Funds (ETFs) can be considered as an option for their low costs and ability to track an index. This naturally leads to a question: can you combine the two and do an SIP in an ETF?

The short answer is no. There is no SIP facility in ETFs. However, some stockbrokers may provide SIP like facilities for investing in an ETF.

How an ETF SIP Works?

When you start an SIP in a mutual fund, you give an instruction to the Asset Management Company (AMC). The AMC debits the fixed amount from your bank account and allots you units based on the day's closing Net Asset Value (NAV).

An ETF SIP works differently because ETFs are bought and sold on the stock exchange, just like stocks. Therefore, an ETF SIP is not a facility offered by the fund house/AMC, but rather a feature provided by your stockbroker.

This is how it functions:

1. You set up a "Stock SIP" or "Basket SIP" instruction with your broker.
2. You choose the ETF, the amount, the frequency and the date for your SIP.
3. On the scheduled date, your broker automatically places a buy order on the stock exchange for your chosen ETF at the prevailing market price.

Benefits of an ETF SIP

• Discipline: You get the primary benefit of an SIP - investing regularly without trying to time the market.
• Rupee Cost Averaging: You automatically buy more ETF units when prices are low and fewer units when prices are high, averaging your purchase cost over time.
• Low Cost: You benefit from the typically lower expense ratios of ETFs compared to many actively managed mutual funds.

Key Pointers to Keep in Mind when doing SIP in ETFs 

1. Demat Account: An ETF SIP requires a Demat and trading account, as ETFs are held in dematerialized form, just like stocks.
2. Price vs. NAV: You buy ETF units at the real-time market price during the trading day, not at the end-of-day NAV like in a mutual fund.
3. Fractional Units: Mutual fund SIPs allow for fractional units. If your ₹1,000 SIP buys 95.2 units, you get exactly that. ETFs, like stocks, are typically bought in whole units. If your SIP is ₹1,000 and the ETF unit price is ₹300, your broker will buy 3 units (costing ₹900), and ₹100 will remain uninvested in your trading account.
4. Costs Involved: There are costs associated with investing in ETFs such as expense ratio. Also there may be brokerages charged for ETF SIPs.

In summary, while the mechanism differs from traditional mutual funds, doing an SIP in ETFs is entirely possible through most brokerage platforms. It remains a useful method for investors to gain market exposure and build a diversified portfolio with the same disciplined, systematic approach.

Disclaimer - Please note that this article or document has been prepared on the basis of internal data/ publicly available information and other sources believed to be reliable. The information contained in this article or document is for general purposes only and not a complete disclosure of every material fact. It should not be construed as investment advice to any party in any manner. The article does not warrant the completeness or accuracy of the information and disclaims all liabilities, losses and damages arising out of the use of this information. Readers shall be fully liable/responsible for any decision taken on the basis of this article or document.

Mutual Fund investments are subject to market risks, read all scheme related documents carefully.

Published on Dec 3rd, 2025