{"id":1236,"date":"2010-06-26T02:28:55","date_gmt":"2010-06-25T20:58:55","guid":{"rendered":"http:\/\/greenworldinvestor.com\/?p=1236"},"modified":"2010-06-26T02:28:55","modified_gmt":"2010-06-25T20:58:55","slug":"review-of-indian-market-etfs-reveals-lack-of-both-depth-and-variety","status":"publish","type":"post","link":"https:\/\/iiec-india.org\/greenworld\/2010\/06\/26\/review-of-indian-market-etfs-reveals-lack-of-both-depth-and-variety\/","title":{"rendered":"Review of Indian Market ETFs reveals Lack of both Depth and Variety"},"content":{"rendered":"

Exchange Traded Funds or ETFs<\/strong> have revolutionized the Investment Industry in recent times due to their simplicity,low costs and ease of use.The US Market has seen a massive growth in the usage of this\u00a0 Financial Instrument with a mind boggling variety of ETFs catering to almost every asset class ranging from equities,bonds,currencies,commodities and even derivatives.The low cost of the ETFs compared to the mutual funds and their passive form has attracted investors in huge droves.These instruments have a very low percentage cost ranging in the 0.5% range compared to 2% or more for mutual funds.Also unlike MFs,these can be traded like a normal stock during market hours compared to Mutual Funds which can only be traded after the close of the markets.There is a massive amount of literature available on the ETFs so I won’t write more on that here.<\/p>\n

Indian ETF evolution<\/strong><\/p>\n

The Indian Market despite being classified as an Emerging Market has seen continuous reforms by the stock market regulator SEBI\u00a0 making the Indian market a pathbreaker in some respects.This institution has been very proactive in deepening and reforming the stock markets in India.Though hazards for Indian investors are present,the market regulator has been trying to curb them through new rules .ETFs in India have been around for a while,but have not won become popular in a substantial way.<\/p>\n

Benchmark <\/strong>Asset Managment Company (<\/strong>AMC) has been the only <\/strong>AMC <\/strong>which has focused on the ETF sector<\/strong> in India.The expenses of ETFs launched by this company are decently low and are passively managed (unlike some others).What has helped is that Benchmarket AMC does not have a huge Mutual Fund portfolio to market like other AMCs.Mutual Funds are much more profitable for an AMC and it does not make sense for them to actively pursue the less profitable ETFs.India also does not have large independent Buy-Side Funds which would increase demand for ETFs.Benchmarket AMC despite having the largest variety of ETFs has managed to get some measure of success with\u00a0 only two of its ETFs. The first one is “Nifty Bees” based on India’s\u00a0 NIFTY 50 stock index and the second is “LIQUIDBEES” which has been marketed as the world’s first money market based ETF.The other ETFs launched by this company have suffered from low volumes and not garnered much success.It also recently launched India’s first foreign ETF\u00a0 “HNGSNGBEES”based on the Hong Kong’s Hang Seng Stock Index.This ETF too does not seem to be getting much success.<\/p>\n

Other Fund Houses Almost Non-Existent in ETF Products<\/strong><\/p>\n

India’s large AMCs like Reliance,Kotak,Prudential,HSBC,HDFC etc have been laggards in the ETF segment.While most of the fund houses have started ETFs based on Gold and Stock Indices,they remain quite unpopular till now.It is not a big surprise considering their relatively high expenses,lack of differentiation and non-passive nature.The whole purpose of an ETF is defeated if its expense structure is too high or its passive nature of investing is violated.<\/strong>ETFs in India is certain to grow in the future due tits excellent value proposition compared to other financial instruments like Mutual Funds.The current state of the ETF sector reveals it to be severely underpenetrated lacking both in depth and variety.Benchmark is the only AMC be focusing on this sector.There is an excellent opportunity for a new player to make a mark in this sector considering its huge growth potential.<\/p>\n","protected":false},"excerpt":{"rendered":"

Exchange Traded Funds or ETFs have revolutionized the Investment Industry in recent times due to their simplicity,low costs and ease of use.The US Market has seen [\u2026]<\/span><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_eb_attr":"","content-type":"","footnotes":""},"categories":[88,31],"tags":[400,1796,3703],"class_list":["post-1236","post","type-post","status-publish","format-standard","hentry","category-finance-indian-capital-markets","category-indian-capital-markets","tag-amc","tag-etf","tag-mutual-fund"],"_links":{"self":[{"href":"https:\/\/iiec-india.org\/greenworld\/wp-json\/wp\/v2\/posts\/1236","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/iiec-india.org\/greenworld\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/iiec-india.org\/greenworld\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/iiec-india.org\/greenworld\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/iiec-india.org\/greenworld\/wp-json\/wp\/v2\/comments?post=1236"}],"version-history":[{"count":0,"href":"https:\/\/iiec-india.org\/greenworld\/wp-json\/wp\/v2\/posts\/1236\/revisions"}],"wp:attachment":[{"href":"https:\/\/iiec-india.org\/greenworld\/wp-json\/wp\/v2\/media?parent=1236"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/iiec-india.org\/greenworld\/wp-json\/wp\/v2\/categories?post=1236"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/iiec-india.org\/greenworld\/wp-json\/wp\/v2\/tags?post=1236"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}