Exchange traded funds Assets 578% Grow

Exchange traded funds (ETFs) have caught the investors’ fancy going by the whopping 578% increase in their aggregate corpus in the first 11 months of this fiscal. (2104-15)

From Rs. 927 crore at the end of March 2014, the assets under management (AUM) of the 29 equity ETFs listed in India had grown to Rs. 6,282 crore, official data showed.

Some of the key drivers for the ETF growth in general are increased awareness about ETFs as passive investment vehicle for equity investments  given its low cost structure; the Centre’s move in early 2014 to use ETF route for its divestment programme; and the increased investor appetite for equity post the BJP government’s historic win in May last year.

Product training and awareness conducted by the NSE and some of the leading fund houses (asset management companies) have helped, said a senior NSE official.

Within the category of ETFs, Banking related ETFs (5 in number) have shown a high growth, thanks to the strong investor appetite for products around the Bank Nifty Index.

All the five banking ETFs are based on CNX Bank Nifty and CNX PSU bank indices. From an aggregate AUM level of Rs. 74 crore at end March 2014, the total AUM of the 5 banking related ETFs has surged to Rs. 2,431 crore as at end February this year.

The banking sector in general has seen an increased investor interest in the last one year, say capital market observers. The Bank Nifty index has given around 83% returns over the last one year, for the period ended February, they said.

Bank Nifty represents almost 91% of the free float market cap of the banking stocks listed on NSE.

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