ETFs catch on, total assets base on NSE rises 9 pc in 6 months to Rs 1.5 lakh cr

In a sign of growing investor interest in exchange-traded funds (ETFs), the asset base of such securities on the National Stock Exchange has surged over nine percent in the last six months to Rs 1.5 lakh crore at September-end. Till September, a total of 71 ETFs were benchmarked to various equity and debt indices, while the number stood at 66 by March this year.

"Increasing awareness about ETFs, large-cap active funds struggling to outperform large-cap indices based ETFs and low fund management fees of ETFs are few other key factors which have helped the growth of ETF in India," NSE said in a statement on Friday. ETFs are a group of securities that are traded like individual stocks on an exchange and they can track indices of various asset classes such as equity, fixed income, commodities, among others.

The Assets Under Management (AUM) of ETFs based on NSE indices stood at Rs 1,47,187 crore at September-end as compared to Rs 1,34,626 crore at the end of March this year and Rs 72,888 crore at March-end 2018. Globally the total asset base across 7,797 ETFs reached USD 5.78 trillion as of September 30 this year. ETF AUM is dominated by the US (70 percent market share), followed by Europe (16 percent) and the Asia Pacific (11 percent).

First ETF in India was launched in December 2001 which was based on Nifty 50 and now the number has reached 71. However, the major growth in the ETF segment started in 2014 when the government decided to take the route for disinvestment through CPSE ETF.

After witnessing the success of the first CPSE ETF, DIPAM subsequently came up with a couple of more tranches of CPSE ETF in 2016-17 and Bharat 22 ETFs in 2017-18, 2018-19 and 2019-20. The total capital mobilized through this route is now Rs 90,000 crore. The NSE said it has been aggressively promoting the ETF product category across various investor classes such as retail, institutional investors, long-term pension funds through various platforms such as television commercials, print media, social media, seminars, and conferences.

The exchange, further said, it is continuously engaging with investors to ensure larger participation from the retail segment in ETFs. Besides, NSE Indices Ltd, an NSE group firm, has been continuously launching new and innovative indices across multiple strategies and asset classes.