Total ETF AUM has increased by 62 % during last one year (Sept 2018 – Sept 2019)

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Exchange Traded Funds (ETFs) are group of securities which are traded like individual stocks on an exchange. ETFs can track indices of various asset classes such as equity, fixed income, commodities etc. Key features of ETFs are transparency, low cost, easy diversification etc.

Phenomenal growth of ETFs in Global Markets

ETFs are attracting significant inflows globally. Globally the growth in ETF segment both in terms of Asset under management (AUM) and range of products has been phenomenal. Globally the total asset under management across ~7797 ETFs/ETPs has crossed USD 5.78 trillion as on Sep, 2019 (Source www.etfgi.com). ETF AUM is dominated by US (70% market share), followed by Europe (16%) & Asia Pacific (11%).

ETFs in India

From the first ETF launched in India in December 2001 that was benchmarked to Nifty50, today there are 71 ETFs benchmarked to various equity and debt indices with total asset under management of ~ Rs 1.47 Trillion.

Equity & Debt ETFS – Nos. of Schemes and Asset under Management (AUM):

ETF/FY Mar 13  Mar 14 Mar 15 Mar 16 Mar 17 Mar 18 Mar 19  Sep  19
AUM (Rs Cr.) 1476 4528 8060 16063 44436 72888 134626 1,47,187
# of ETFs 23 26 34 45 51 56 66 71

Source –AMFI

Domestic ETF Landscape

 

Trading volumes of ETFs on NSE (Rs. Cr):

FY FY-13 FY-14 FY-15 FY-16 FY-17 FY-18 FY-19 FY 20*
Debt ETFs                    4,454       5,234    7,735         13,785     18,494     24,571     24,159     13,701
Equity ETFs                    1,255         930    3,428           3,590      5,745      4,661     17,834     11,862

Source: NSE, * As on Sep 2019

Average Daily Trading Volume (ADV) of ETFs at NSE:

ADV in Rs Cr FY-13 FY-14 FY-15 FY-16 FY-17 FY-18 FY-19 FY 20*
Debt ETFs  18  21  32  56  75  100  97  112
Equity ETFs  5  4  14  15  23  19  72  98

Source: NSE, * As on Sep 2019

Key Growth Drivers

The major growth in ETF segment started in 2014 when the Government decided to take ETF route for disinvestment through CPSE ETF and after witnessing the success of the first CPSE ETF, DIPAM subsequently came up with a couple of more tranches of CPSE ETF in 2016-17 and Bharat 22 ETFs in 2017-18 , 2018-19 and 2019-20. The total capital mobilised via CPSE ETF and Bharat 22 ETF is ~ Rs 90,000 Cr.

Also, in August 2015, in a momentous move, Employees’ Provident Fund Organisation (EPFO) started its investment in the stock markets for the first time through Nifty50 and SENSEX based ETFs.

Increasing awareness about ETFs, Large cap active funds struggling to outperform large cap indices based ETFs and Low fund management fees of ETFs are few other key factors which has helped the growth of ETF in India.

Roles of NSE in promoting ETFs

NSE has been aggressively promoting the ETF product category across various investor classes such as Retail, Institutional investors, long term pension funds etc. though TVC, Print media, social media, Seminars and conferences.

NSE is continuously engaging with investors to ensure a larger participation from the retail segment in ETFs. NSE runs an elaborate investor education and awareness program and has conducted 4181 programs across 619 districts in FY 18-19. Many such programs were conducted in association with the market regulator SEBI and benefits of ETFs were also discussed along with other topics related to investors’ awareness etc.

To facilitate the growth of ETF segment and to give options to investor to choose the best suitable ETFs, NSE indices Ltd, a NSE group Company, continuously launches new and innovative indices across multiple strategy and asset class.