Which Broker Saves You More on ETFs—HDFC SKY or Zerodha?

Investing in Exchange-Traded Funds (ETFs) has gained significant traction among Indian investors seeking diversified exposure to various asset classes. As ETFs are traded on stock exchanges like individual stocks, understanding the associated brokerage charges is crucial for optimising investment returns. This guide explores the intricacies of ETF brokerage charges and compares them across various trading platforms in India.
What is an ETF?
An Exchange-Traded Fund (ETF) is a type of investment fund that holds a diversified portfolio of assets, such as stocks, bonds, or commodities, and is traded on a stock exchange. ETFs aim to replicate the performance of a specific index, offering investors a way to invest in a broad market segment with a single transaction. They combine the diversification benefits of mutual funds with the trading flexibility of stocks.
Understanding ETF Brokerage Charges
Brokerage charges are fees levied by brokers for executing buy or sell orders. Though they may appear minor, these costs can affect overall returns, especially for frequent traders. Understanding these charges is essential for making informed investment decisions.
Exchange-Traded Funds (ETFs) have gained popularity among Indian investors for offering diversified exposure across asset classes at low costs. Since ETFs are traded like stocks, they incur similar fees and taxes, which vary depending on the brokerage platform and its pricing model.
ETF brokerage charges can be categorised into two main types:
When investing in ETFs, understanding how brokerage charges are applied is essential for managing costs effectively. Two primary types of brokerage charges are commonly used:
1. Flat Charges
These are fixed fees charged per trade, regardless of the transaction value. For example, whether an investor trades ₹10,000 or ₹1,00,000 worth of ETFs, the brokerage fee remains the same. This structure benefits high-volume or large-value investors, as it ensures predictability and cost control. It can be especially advantageous for those executing frequent or bulk trades, helping maximise returns by keeping transaction costs stable.
2. Rate-Based Charges
Unlike flat charges, rate-based fees are calculated as a percentage of the total transaction value. As a result, the brokerage increases with the size of the trade. While this model may suit small investors making lower-value trades, it becomes costlier for larger investments. Over time, especially in active trading, these variable costs can add up and impact the overall efficiency of ETF investing.
By understanding the difference between flat and rate-based brokerage charges, investors can choose platforms that align with their trading volume and frequency. To support better investment planning, many investors use tools like a SIP calculator to estimate potential returns and build long-term strategies alongside ETFs.
Comparison of ETF Brokerage Charges Across Different Platforms
Choosing the right trading platform can significantly impact the cost-effectiveness of ETF investments. Below is a comparison of ETF brokerage charges between HDFC Sky and Zerodha.
1. HDFC Sky
HDFC Sky presents a strong and attractive proposition for ETF investors by combining affordability with valuable features tailored to enhance the investing experience.
One of its standout offerings is zero brokerage on ETFs, allowing investors to trade without incurring any brokerage fees. This approach proves highly cost-effective, especially for those engaging in frequent or high-volume trades. HDFC Sky further reduces entry barriers by waiving account opening charges, making it easier for new investors to begin their journey. Moreover, investors benefit from zero annual maintenance charges (AMC) during the first year, helping them maximise savings in the initial stages of their portfolio building.
Key advantages include:
●Zero Brokerage on ETFs – Cost-effective trading for all investor types
●Free Demat Account Opening – No initial setup cost
●Zero AMC in First Year – Additional savings for new users
●Research-Based Recommendations – Curated ETF recommendations help investors make informed decisions
●Margin Trading Facility (MTF) – MTF is Available at 1% per month for those interested in leveraged trades
2. Zerodha
Zerodha, a well-known discount brokerage, offers a structured and competitive pricing model for ETF investors. It charges zero brokerage on ETF delivery, making it appealing for long-term holders. For ETF intraday, the fee is ₹20 or 0.03% per executed order, whichever is lower. The account opening charge is ₹0, while annual maintenance charges (AMC) are ₹300. Zerodha also provides a user-friendly platform equipped with essential tools and resources for informed trading.
●ETF Delivery: ₹0 brokerage
●ETF Intraday: ₹20 or 0.03% per order
●Account Opening Charges: ₹0
●Annual Maintenance Charges: For BSDA accounts, there are no AMC charges if holdings are up to ₹4,00,000.
●If holdings range between ₹4,00,000 and ₹10,00,000, the AMC is ₹100 + 18% GST annually or ₹25 + 18% GST quarterly.
●For non-BSDA accounts, Individuals, HUFs, and Partnerships are charged ₹300 + GST yearly or ₹75 + GST quarterly. NRIs pay ₹500 + GST yearly or ₹125 + GST quarterly.
●Corporate accounts are charged ₹1,000 + GST yearly or ₹250 + GST quarterly.
●IL&FS (pre-2015) accounts have an AMC of ₹400 + GST yearly or ₹100 + GST quarterly.
●Platform: User-friendly with trading tools and insights
Comparison Table: HDFC Sky vs. Zerodha
Feature | HDFC Sky | Zerodha |
Brokerage on ETF Delivery Trades | ₹0 | ₹0 |
Brokerage on Intraday ETF Trades | ₹0 | 0.03% or ₹20 per order, whichever is lower |
Account Opening Charges | ₹0 | ₹0 |
Annual Maintenance Charges (AMC) | Free for 1st year, ₹20/month thereafter | BSDA AMC Charges Based on Holdings: (i) Up to ₹4,00,000: No annual or quarterly charges (ii) ₹4,00,000 to ₹10,00,000: ₹100 + 18% GST annually, ₹25 + 18% GST quarterly
Non-BSDA AMC: (i) Individual/HUF/Partnership: ₹300 + GST yearly, ₹75 + GST quarterly
(ii) NRI: ₹500 + GST yearly, ₹125 + GST quarterly
(iii) Corporate: ₹1,000 + GST yearly, ₹250 + GST quarterly
(iv) IL&FS (pre-2015): ₹400 + GST yearly, ₹100 + GST quarterly
|
DP Charges | ₹27.73 per sell transaction | ₹15.34 (₹13 + GST) per sell from a Demat account. For women account holders, it’s ₹15.01 (₹12.75 + GST). |
Conclusion
Understanding the various brokerage charges associated with ETF trading is vital for maximising investment returns. By comparing different platforms and their fee structures, investors can select the one that aligns best with their trading frequency and investment goals. Utilising a comprehensive Demat Account App can further streamline the investment process, offering real-time insights and seamless transactions.
HDFC Sky distinguishes itself by offering zero brokerage on ETF trades, free account opening, and no AMC for the first year. These investor-friendly features make it highly cost-effective, especially for beginners and high-volume traders seeking low-cost, efficient investment solutions.
(The views, opinions, and claims in this article are solely those of the author’s and do not represent the editorial stance of The Assam Tribune)