Domestic ETF assets jump 10-fold at Rs 895 billion in the past three years

The NSE is positive on the growth prospects of ETFs in India, and is closely working with all stakeholders

Mutual Funds: Illustration: Binay Sinha
Illustration: Binay Sinha

The assets under management (AUM) of exchange-traded funds (ETFs) — both equity and debt — has seen a tenfold jump in the past three years. At the end of October, equity and debt ETF AUM in India stood at Rs 895 billion. 

Three years ago, it stood at Rs89 billion. Global ETF AUM recently crossed the $5-trillion mark. “ETF is a low-cost investment product and provides easy diversification. The NSE is positive on the growth prospects of ETFs in India, and is closely working with all stakeholders,” said Vikram Limaye, managing director and chief executive officer, NSE, during the India ETF Conference 2019. Indices, provided by NSE's Nifty, account for 76 per cent of the ETF AUM, the exchange said in a release. “ETF route shall now be increasingly used by various stakeholders, including by the government, to continue monetising their holdings,” said Atanu Chakraborty, secretary, Dipam. He said the government might look at launching another tranche of the Bharat 22 ETF.

Further, Chakraborty said the government's move to reduce its stake in Pawan Hans was at an advanced stage. The Dipam secretary said the government would achieve its disinvestment target of Rs 800 billion.  

ETF is a basket of securities traded like individual stocks on an exchange. ETFs can track indices of various asset classes such as equity, fixed income, commodities.

First ETF in India was launched in December 2001.  However, the ETF segment got a boost in 2014, when the government decided to divest in Central Public Sector Enterprises (CPSEs) through the ETF route. The CPSE ETF is benchmarked to NIFTY CPSE Index.  Since then, the government has mobilised about Rs350 billion through two ETFs - CPSE ETF and Bharat 22 ETF.