ETFs
Passive investment boom drives up ETF assets under management – Market News
Exchange Traded Funds (ETFs), which have gained popularity in recent years, account for nearly Rs 7 trillion or 13% of the assets under management (AUM) of the Indian mutual fund industry. This indicates a shift towards more investors choosing ETFs as their preferred mode of investment, according to a study by Zerodha Fund House.
The number of equity and debt ETF accounts in India increased from 5.33 lakh in 2017 to 1.25 crore in 2023, reflecting wider acceptance and understanding of ETFs among retail investors,” the study said. The study attributes the growing popularity of ETFs to their lower costs, diversification benefits and ease of trading.
Many fund companies have focused on expanding their ETF portfolio over the past couple of years. According to data from the Mutual Funds Association of India, 7 out of 9 new fund offerings (NFOs) in May were either index funds or ETFs.
ETF trading volume increased from Rs 26,139 crore in FY17 to Rs 1.84 trillion in FY24, according to the Zerodha Fund House study. “This increase of over 600% reflects growing investor confidence and the maturation of the ETF. walk in India. Over the past year, ETF trading volume has seen significant growth of approximately $1,000,000,000,000. 64,000 crores,” it says.
However, 99% of total ETF assets under management come from three indices: Clever 50, Clever next 50 And Nifty Midcap 150.
As more investors recognize the benefits of ETFs, the segment will likely see increased capital flows and diversification. The tendency towards passive invest is expected to persist, driven by retail investors in the years to come,” said Vishal Jain, CEO, Zerodha Fund House.