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| Global ETFs catch mutual funds' fancy |
| Vandana / Mumbai Sep 09, 2009, 00:33 IST |
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Benchmark plans Hang Seng as underlying; Reliance looks at MSCI.
Exchange Traded Funds (ETFs), the only mutual fund asset class that received fresh inflows last year, are catching up fast.
A host of mutual fund houses are set to launch products with global indices as underlying. Sample this: Benchmark has filed for an ETF based on the Hang Seng Index of Hong Kong. Reliance Mutual Fund too will come up with an ETF with MSCI India Index as the underlying and is awaiting the regulator's clearance.
The low-cost advantage is yet another reason for fund houses to look at ETFs as an attractive product for investors wherein they can trade real time. The cost of investing in ETFs stands at 0.5 per cent. With the no-entry load regime kicking in, fund houses want to concentrate on products which offer good returns with low-cost advantage.
With Hang Seng being one of the top traded markets in Asia, Indian investors can now look forward to investing there on real time basis. According to the investment objective of the scheme, it will offer returns that closely correspond to the total returns of securities in the Hang Seng Index. The units of the scheme will be listed on the National Stock Exchange and can be bought or sold like any other fund.
The Chinese market has slipped about 15-16 per cent from its August highs and there have been talks of it being overheated, raising concerns among a lot of FIIs and investors about investing in that market. However, Rajan Mehta, Executive Director, Benchmark Mutual Fund, said, "We feel it is better to enter that market after the meltdown. Chances of making money will be much higher if somebody enters now as stocks have corrected sharply".
Benchmark has also filed for an Infrastructure ETF which will track the CNX Infrastructure index. It had earlier filed for ETFs with silver and oil as the underlying, but could not get approvals due to regulatory issues.
Reliance Mutual Fund's MSCI India Index ETF plans to mirror the returns posted by the MSCI India Index. Some of the stocks, which form a part of the MSCI India Index, include heavyweight Reliance Industries, Infosys, ICICI Bank, L&T, ONGC, BHEL, Sterlite Industries and Wipro among others.
Sundeep Sikka, CEO, Reliance Mutual Fund said, " We already have a tieup with MSCI Barra for risk enterprise solutions. But, there is a lot of international money waiting to come to India and MSCI is the most acceptable benchmark for a lot of institutional investors. We see a lot of appetite going ahead for this product class and will be launching a bouquet of products in this category".
The total assets under management under ETFs in India was Rs 878 crore at the end of July compared to Rs 898 crore in June, according to AMFI.
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