50 ETFs’ India AUM crosses Rs 1 Trillion

Economic Times

Nifty 50 ETFs’ AUM crosses Rs 1 lakh crore

17 September 2020

If you thought the deafening D-Street din drowns the passive voice, think again. Exchange-traded funds (ETF), which aren’t actively managed, mimic the index and have far less intervention from a money manager. Yet, the industry has expanded about 30 times in the past five years, albeit on a negligible starting base.

Assets under management (AUM) by ETFs tracking the Nifty 50 now account for about ₹1 lakh crore, about half the corpus for the ETF industry.

“Investors who want to keep things simple and are bullish about the long-term prospects of the economy prefer simple, broad-based indices like the Nifty 50 or Nifty Next 50,” said Vishal Jain, head — ETF, Nippon Mutual Fund.

Nippon India AMC has seen the number of investors coming into ETFs double in the first five months of this financial year.

ETFs score on the cost front. While an actively managed fund could charge anywhere close to 2% per annum in a regular plan, most popular ETFs on the Nifty 50 or Nifty Next 50 charge between 5 and 50 basis points as expense, which helps investors save costs.

“Investor portfolios today need to have a mix of both ETFs and passive funds,” said Swarup Mohanty, CEO, Mirae Asset Mutual Fund.

“ETFs are passively managed and they score as there is no fund manager bias,” said Harshvardhan Roongta, CFP, Roongta Securities.

Globally too, SPDR S&P 500 ETF (SPY) that invests in the S&P 500 is one of the most popular ETFs and manages assets close to $300 billion.

Retail and HNI savers are slowly putting money into ETFs. But the Employees’ Provident Fund Organisation (EPFO) invests 15% of its accruals in ETFs and is one of the biggest buyers into these funds.

“Since 2015, EPFO has invested Rs 1.03 lakh crore in the Nifty 50 and S&P BSE Sensex ETF,” India ETFs and Index Funds said in a tweet.

NSE data showed that actual growth in the ETF AUM took place in the last five years wherein the AUM of ETFs in India has grown from Rs 7,032 crore as on August 31, 2015, to Rs 2.07 lakh crore as on August 31, 2020, an annualised growth rate of 97%.

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Times of India

ETFs jump 26x in 5 yrs, cross ₹2L cr

16 September 2020

MUMBAI: There has been a 26-fold rise in assets under management (AUM) of exchangetraded funds (ETFs) in a little over five years to more than Rs 2 lakh crore now. The main reasons are government support for these schemes, rising popularity among investors, and acceptance by fund houses to launch equity and debtbased ETFs with lower management costs.

Of the total, ETFs on the NSE’s Nifty index have a 49% market share, accounting for a little over Rs 1 lakh crore, data from MF industry body Amfi showed. And gold ETFs managed assets worth an additional Rs 13,500 crore. According to NSE MD & CEO Vikram Limaye, the exchange was working actively with the MF industry “for creating investor awareness and promotion of ETFs through various channels of communication in India”.

Nifty 50 and various other Nifty indices have been well accepted and recognised for launching ETFs in India, said NSE Indices CEO Mukesh Agarwal. His entity constructs and manages various indices based on which ETFs have been launched by fund houses. “NSE Indices believes in product innovation and we will continue to work with various stakeholders in developing new indices, including debt indices, to facilitate new ETFs that will offer a variety of investment products to investors,” Agarwal said.

A large part of the growth in ETFs’ AUM could be attributed to the decision by the EPFO five years ago to invest part of its incremental inflows in equities through the ETF route, fund industry officials said. The number of ETFs has also more than doubled to 82, from 34 as of end-fiscal 2015.

In August 2015, the EPFO had initially agreed to invest 5% of incremental monthly inflows into ETFs based on the Nifty, and then included similar schemes based on the sensex. SBI Mutual Fund was the first to get the EPFO mandate, followed by UTI MF. While this gave a boost to ETFs in India, the mandate by the government to launch several ETFs also boosted its popularity

Fund houses run by Nippon Life, ICICI Prudential and Edelweiss currently have government mandates to run equity and debt ETFs.

According to ICICI Prudential Mutual Fund MD & CEO Nimesh Shah, the two most important drivers for ETF growth in India have been the government and the regulatory thrust in this segment. “The government thrust has been largely driven by EPFO corpus allocations and adoption of ETFs for its disinvestment initiatives,” Shah said.

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Money Control

Asset under management of ETFs tracking Nifty crosses Rs 1 lakh crore

"This milestone achieved is the culmination of efforts put in by all stakeholders such as Ministry of Finance (GOI), Ministry of Labour & Employment (GoI), SEBI, EPFO, ETF issuers, investors, trading members, etc.," NSE said in the release.

16 September 2020

The Asset under management (AUM) of all the Exchange Traded Funds (ETFs) tracking the Nifty50 index in India has crossed a new milestone of Rs 1 lakh crore, NSE said in a press release on September 16.

The total AUM of the ETF (equity & debt) industry in India has crossed Rs 2 lakh crore, the release added.

"This milestone achieved is the culmination of efforts put in by all stakeholders such as Ministry of Finance (GOI), Ministry of Labour & Employment (GoI), SEBI, EPFO, ETF issuers, investors, trading members, etc.," NSE said in the release.

As per NSE, ETF investments in India are witnessing good growth primarily due to transparency, diversification and cost-effectiveness.

In March 2014, the GoI decided to take the ETF route for disinvestment through CPSE ETF. The Employees’ Provident Fund Organisation (EPFO) started to invest a part of its funds in equities through the ETFs in August 2015.

These are significant measures and critical stepping stones for the success of the Indian ETF Industry, NSE said.

The first ETF was launched in India in December 2001 and was linked to Nifty50.

However, as per NSE, the actual growth in the ETF AUM has happened only in the last five years wherein the AUM of ETFs in India has grown from Rs 7,032 crore as on August 31, 2015, to Rs 2.07 lakh crore as on August 31, 2020 (annualised growth rate of 97 percent).

During this period, the number of ETFs available in India has also grown from 36 as on August 31, 2015, to 82 as on August 31, 2020, NSE pointed out.

On this occasion, Vikram Limaye, MD & CEO, NSE said: "We are very encouraged by the investors’ continued confidence demonstrated through their participation in ETFs linked to Nifty50 and other Nifty Indices. NSE has been on the forefront and has been working actively with the mutual fund industry for creating investor awareness and promotion of ETFs through various channels of communication in India."

"NSE will continue to actively promote ETFs to retail investors through multiple channels. I am confident with the focused efforts of all the stakeholders we would achieve many more milestones in the future," he added.

Mukesh Agarwal, CEO, NSE Indices said: "Nifty50 and various other Nifty indices have been well accepted and recognised for launching ETFs in India. In addition to Nifty50, there are 25 other Nifty indices on which ETFs are available in India. NSE Indices believes in product innovation and we will continue to work with various stakeholders in developing new indices, including Debt Indices, to facilitate new ETFs that will offer a variety of investment products to investors."

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