100th ETF listed
Exchange Trade Funds (ETFs) exist as an alternative investment option for those who wish to buy and sell mutual fund units during the trade hours of the stock exchange. They are listed and traded like stocks and track a specific index.
According to the National Stock Exchange of India (NSE), 100 ETFs have been listed so far with 21 coming in the last year. The assets under management of ETFs in India has witnessed more than 13.8 times increase in five years, jumping from Rs. 23,000 crore in April 2016 to Rs. 3.16 lakh crore in May 2021.
ETFs are cheap investments and permit one to take exposure to several stocks of the same index at once. The first ETF was launched by Nippon India mutual fund in January 2002 with the Nifty 50 Index as the benchmark.
The Nifty 50 Index has continued to be the most popular index with 17 asset management companies(AMCs) launching ETFs on this index. Nifty Bank Index and Nifty Next 50 Index are other popular equity indices.
AMCs have now begun to notice increased traction and have been launching ETFs on different themes like the sectoral ones. It has come in various forms, there are 11 of them registered with underlying assets as gold. More than 12 lakh investors transacted in gold funds in the past year.
With assets under management of about Rs. 34,000 crores, the Bharat Bond Index series are the most popular corporate bond. They are the first ones of the kind with underlying as the public sector enterprises corporate bonds and the first Target maturity ones.
The Government of India has reduced the Security Transaction Tax (STT) to just 0.001% during the selling of units to encourage participation in the equity. The STT is also not applicable to non-equity oriented ETFs.
The number of investors has hiked by 96%, the first three months of FY22 have seen transactions by more than 22 lakh investors already. The average daily turnover of EFTs on NSE currently stands at an estimated Rs. 265 crores.