ETFs catch on: Daily average value on NSE surges 70x in 10 years

Even though many investors in India prefer active funds, passively managed funds have seen an upsurge in demand. Recent data from the National Stock Exchange (NSE) indicates that, exchange traded funds (ETFs) have seen huge uptick in volumes in the last decade. Daily average value in ETFs on NSE which used to be less than a crore a day has surged to around Rs 70 crore in the last 10 years.

An official statement released by the NSE on Friday shows that in terms of daily turnover, ETFs showed a jump of 2.5 times from Rs 7.8 crore to Rs 19.75 crore from Q3 to Q4 of financial year 2014-15. During the last ten years, Nifty-based ETFs have given a return of 15%, making them one of the most attractive investment avenues for retail and small-time investors, official statement said.

“ETFs are a wonderful product for retail investors in particular. Over the years, ETFs based on Nifty and other products have given investors significant returns. Globally people look forward to such products and currently NSE offers 42 ETFs,” said Ravi Varanasi, chief business development of the National Stock Exchange.

ETFs are traded just like stocks and hold assets like stocks, gold or bonds close to their asset value and can be bought with investment of less than R100. The daily liquidity and fees for ETFs is also lower than mutual funds. NSE has 47 different kinds of ETFs listed including ETFs on gold, banking and Central Public Sector Enterprises (CPSE) among others.

Data shows that allocation of retail and high networth individuals (HNI) in assets under management (AUM) has increased from R1,102 crore in March 2014 to R1,656 crore in March 2015 on the NSE platform.

National Stock Exchange of India Ltd (NSE)