Concentrated portfolio of bank ETFs under Sebi lens

To look at diversification risk from bank ETFs investing in stocks of banking indices

The Securities and Exchange Board of India (Sebi) is looking at the diversification risk from bank exchange-traded funds (ETFs) investing in stocks of the banking indices of the two major bourses.

Of a total of 12 banking scrips in the National Stock Exchange's Nifty Bank index, three — HDFC Bank, ICICI and Kotak Mahindra — contribute 45 per cent to the index weight. The bottom five contribute five per cent.

Similarly, for the BSE exchange's Bankex, the top five out of 10 stocks contribute four-fifths to the weight.

These indices are created on a free-float method. Here, the price is