AUM of ETFs tracking Nifty tops ₹1 tn but retail investors stay in active fund
1 min read.Updated: 15 Sep 2020, 12:38 PM ISTNeil Borate
The total AUM of ETFs in India (debt and equity) is about ₹2.7 trillion, up from just ₹7,000 crore around five years ago
Out of this, about ₹1.6 trillion is tracking Nifty indices with ₹1 trillion tracking the Nifty 50 index alone
The total asset under management (AUM) of exchange traded funds (ETFs) in India tracking the Nifty 50 index has gone past the ₹1 trillion level. The National Stock Exchange (NSE) has also established dominance in the ETF space, accounting for 77% of ETF assets tracking equity and debt (excluding gold).
Out of the roughly ₹2 trillion in such ETFs, ₹1.6 trillion track NSE indices. However, the bulk of such money is of institutions such as the Employees Provident Fund Organisation (EPFO). Institutional investors, including EPFO, account for about 92% of the total ETF AUM, but retail investors are a growing force, said Mukesh Agarwal, CEO of NSE Indices.
"The total AUM of ETFs in India (debt and equity) is about ₹2.7 trillion, up from just ₹7,000 crore around five years ago," said Agarwal.
“Out of this, about ₹1.6 trillion is tracking Nifty indices with ₹1 trillion tracking the Nifty 50 alone," he added.
The launch of the Bharat Bond ETFs in 2019 and 2020 has also given NSE a sizeable volume of money in debt ETFs.
“Around ₹25,500 crore is invested in debt ETFs linked to Nifty Bharat Bond Indices, highly popular indices for debt ETFs," said Agarwal.
A senior executive at a financial services firm attributed NSE’s dominance to an early start, pointing out that incrementally money is going to BSE in an equal ratio.
"The ETF space in India is dominated by institutions and will grow further on the back of EPFO, exempted PF trusts and insurance companies. NSE’s dominance in it is simply a result of better marketing and market power," said Anubhav Srivastava, Partner, Infinity Alternatives.
Passive investing in India still has to gain traction among retail investors. Around ₹7.6 trillion sits in actively managed funds in India, much of it money from retail investors. This has continued despite active funds failing to beat indices in recent years. An S&P Indices Versus Active Funds (SPIVA) report for December 2019 showed that 82% of large-cap equity funds underperformed benchmark indices in the past five years.