SUBSCRIBE NEWSLETTER
MF News RIAs, robo advisors to accelerate the ETF growth

RIAs, robo advisors to accelerate the ETF growth

Experts believe ETFs have revolutionised the investment industry globally and RIAs and robo advisors will lead this revolution in India.
Rosevina Gonsalves Nov 4, 2017

A recent PwC report says that the ETF growth will continue over the next five years. In fact, the global ETF AUM will reach $7 trillion by 2021, claims the report.

Globally, robo-advisors and ETF strategists recommend passive funds such as ETFs to their clients.  The trend is likely to accelerate the growth of ETFs in India, says the PwC study.

In fact, in a recent event ‘3rd Annual Thought Leadership Seminar India: A mammoth on the move’ organised by S&P BSE Indices in Mumbai, experts seconded that RIAs and robo advisors would drive the growth of ETFs in India. 

Yogesh Bhatt, Fund Manager, ICICI Prudential MF believes that robo advisors will bring in retail investors in the ETF fold. He said, “Currently, the money in the ETF market is coming through institutional investors only. The retail participation is minuscule. However, with the advent of robo advisors, we believe this is set to change.”

Seconding his views, Vishal Jain, Head of ETF, Reliance Nippon MF believes that RIAs will drive the ETF growth in India. “Since RIAs do not work on commission model, there is no incentive to sell active funds. In fact, fee based advisors draft investment portfolio of their clients purely with the set of ETFs. This will happen in India too with the growth in the number of RIAs.”

Similarly, Navneet Munot, CIO, SBI MF said that the acceptance of ETFs among retail investors has been growing with the participation of EPFO in ETFs. "Globally, institutional investors adopted ETFs and then retail investors followed them. I believe this will happen in in India too. In fact, we have been witnessing retail participation in equity markets through ETFs. ETFs will get more popularity once other pension funds start investing in equity through ETF route.”

Asia Index, a joint venture of S&P Dow Jones Indices and BSE, has launched S&P BSE 100 ESG Index at the event. ESG stands for environmental, social and governance. Launching the index at the event, Ashishkumar Chauhan, MD & CEO, BSE too expressed the view that the low cost of the ETFs compared to mutual funds will draw retail investors to ETFs.

In India, ETFs has grown almost five times in just three years. Its AUM grew from Rs.11,400 crore in March 2014 to Rs.54,000 crore in June 2017. However, bulk of inflows in ETFs has been coming through EPFO.

Currently, there are 66 ETFs in Indian MF industry, of which 12 are in gold category and 54 in other categories. The total AUM is Rs.60,314 crore in ETFs as of September 2017.

 

0 Comment
Be the first to comment.
Wish to stay on top of your game? Get daily tips, ideas and articles to grow your business.
Subscribe to Cafemutual Newsletter.