Exchange traded funds (ETFs) which track the equity indices are getting increasingly popular among retail investors. The daily average turnover of equity ETFs has risen from less than a crore to Rs.70 crore in 10 years, said a press release issued by the National Stock Exchange (NSE).
Nifty ETFs has delivered a CAGR of 15% over the last ten year period, stated the release.
An ETF is a marketable security that tracks an index, a commodity and bond. ETFs trade like a stock on a stock exchange. They can be bought with a miniscule investment of Rs. 100. ETFs prices change throughout the day as they are bought and sold. ETFs typically have higher daily liquidity and lower fees compared to actively managed funds.
“ETF is a wonderful product for retail investors. Over the years, ETFs based on Nifty and others have delivered good returns. ETFs are very popular globally. Currently, NSE offers 42 ETFs,” said Ravi Varanasi, Chief, Business Development, National Stock Exchange.
In Equity ETF, the retail and HNI portion of the AUM has increased by 50% from Rs. 1,102 crore in March 2014 to Rs. 1,656 crore in March 2015 on the NSE platform. Equity ETFs have shown a jump of 2.5 times in daily average turnover from Rs 7.8 crore in Q3 of FY14-15 as compared to Rs. 19.75 crore in Q4 of FY14-15.
Reliance MF has recently launched an ETF on NV20 (NV 20 is a strategy index comprising 20 value stocks from Nifty 50) and a lot of ETFs are in the pipeline with some of the existing AMCs applying for ETFs on different indices, said the release.
ETFs which track equity indices manage Rs. 7,322 crore as on June 2015, which is just 1% of the total Rs. 11.73 lakh crore AUM managed by the industry.
