ETF liquidity falls short despite breaching the Rs 1 trillion mark

Traded value has not risen at the same pace as the increase in assets under management

The value of exchange-traded funds (ETFs) changing hands on the stock market has crossed Rs 1 trillion, but surging inflows may mean investors find it harder to exit in certain situations.

The value of ETF trades has nearly trebled since 2018-19 (FY19) to Rs 1.2 trillion in 2022-23 (FY23). The value of money invested in ETFs is up nearly 4x from FY19 levels to Rs 5.1 trillion as of March 2023. 

This means it will take longer today for investors to redeem money through selling ETF units on the stock exchange than it would have taken them before the pandemic.