ETFs’ assets grew by 60% in past year: NSE Indices

Mukesh Aggarwal, chief executive officer, NSE Indices.

Mukesh Aggarwal, chief executive officer, NSE Indices.  

Total assets pegged at ₹1.47 trillion

Assets of exchange-traded funds (ETFs) grew by over 60% in the past one year with the total assets under management (AUM) pegged at approximately ₹1.47 trillion, according to a presentation made at the NSE India ETF Conference 2019.

From the first ETF launched in India in December 2001, which was benchmarked to the Nifty index, there are 71 ETFs benchmarked to various equity and debt indices today. ETF is a basket of securities that is traded on the stock exchange like any stock.

Speaking at the event, Mukesh Aggarwal, chief executive officer, NSE Indices, said globally the total AUM of nearly 7,800 ETFs is more than $5.78 trillion as of September 2019.

He said the segment is dominated by the U.S., which holds 70% of the market share. It is followed by Europe, which has a 16% share, and the Asia Pacific region with a share of 11% in global ETF assets. He said equity ETFs account for 76% of the total assets and is followed by fixed income at 20% and commodity and others at 4%.

Increasing awareness of ETFs, large cap active funds struggling to outperform large cap indices based ETFs and low fund management fees of ETFs are believed to be some of the key factors that have helped the growth of ETF in India.

Mr. Aggarwal, “[In India], equity ETFs dominate the ETF AUM with 95% market share followed by gold ETFs, which hold 4%.”

He said the domestic ETF AUM linked to equity and debt has grown at a stellar rate of 42% per annum from March 2008.

In his address to mediapersons, Mr. Aggarwal highlighted that the total ETF AUM has increased by 62% during the past year and the AUM of passive funds stood at ₹1.6 trillion in September this year.

He highlighted that the share of passive investments in overall mutual funds has risen from 3.8% in March 2018 to 6.5% in September 2019 and the share of equity ETFs AUM to total equity category — including equity linked savings schemes (ELSSs), close ended and interval schemes and equity ETFs — stood at 17% as on September 30.

As per the NSE, the major growth in the ETF segment started in 2014 when the government decided to take the ETF route for disinvestment through Central Public Sector Enterprises’ (CPSE) ETF. After witnessing the success of the first CPSE ETF, the government came up with a couple of more tranches of CPSE ETF and also Bharat 22 ETFs.

The total capital mobilised through CPSE ETF and Bharat 22 ETF is around ₹90,000 crore. Also, in August 2015, Employees’ Provident Fund Organisation started its investment in the stock markets for the first time through Nifty and Sensex-based ETFs.

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Printable version | Jul 7, 2020 12:57:28 PM |

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