Nifty50 ETFs' assets base crosses Rs 1 trn, asset under management Rs 2 trn

The National Stock Exchange (NSE) on Wednesday said asset base of all the exchange-traded funds (ETFs) tracking Nifty 50 index in the country has crossed Rs 1 trillion, which indicates growing investors' interest in such products.

Also, the total assets under management (AUM) of the ETF (equity and debt) have reached Rs 2 trillion, the NSE said in a statement.

According to the exchange, ETF investments are witnessing good growth primarily due to transparency, diversification and cost effectiveness.

"We are encouraged by the investors' continued confidence demonstrated through their participation in ETFs linked to Nifty 50 and other Nifty Indices...NSE will continue to actively promote ETFs to retail investors through multiple channels," NSE Managing Director and Chief Executive Officer Vikram Limaye said.

The first ETF was launched in India in December 2001 and was linked to Nifty 50. However, the actual growth in the ETF AUM has happened only in the past five years, wherein the asset base of ETFs has surged from Rs 7,032 crore as on August 2015 to Rs 2.07 trillion as on August 2020, indicating an annualised growth rate of 97 per cent.

Also, the number of ETFs has also climbed from 36 to 82 as on August during the period.

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

The exchange believes these were significant measures and critical stepping stones for the success of the Indian ETF industry.

It, further, said that Nifty indices have about 77 per cent market share in terms of asset base (equity and debt) of the ETF industry in the country. Additionally, there are 11 ETFs on Nifty indices that are traded in the international markets.

"Nifty 50 and various other Nifty indices have been well accepted and recognized for launching ETFs in India. In addition to Nifty 50, there are 25 other Nifty indices on which ETFs are available in India," NSE Indices CEO Mukesh Agarwal said.

"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," he added.