Look who are seeing the golden goose in ETFs! | Economic Times

ET Intelligence Group: The exchange traded funds (ETFs) are gaining popularity among retail and high-networth individual (HNI) investors, show the data from the Association of the Mutual Funds in India (AMFI). The assets under management (AUM) of ETFs grew annually by 87% and 64% in the past five and ten years, compared with 18.5% and 14.5% growth in the total AUM of mutual funds.ETFs are similar to index mutual funds but trade on bourses just like stocks. In India, they were launched in 2001. The number of ETFs has increased to 82 from 14 in 2010.Mukesh Agarwal, CEO at the NSE Indices said that response from the individual investors has been quite encouraging owing to the low cost, transparency, diversity, and liquidity of ETFs. “Individual investors (retail and HNI) account for nearly 88% of the total equity-oriented ETF AUM”, he added. The equity-oriented ETFs form 86% of the total ETF AUM.The AUM of ETFs reached a record high of Rs 2.1 lakh crore in August 2020, equivalent to the combined AUM of the large-cap and large-cap with midcap categories of equity funds. Nearly half of the total ETF AUM is linked to the Nifty 50 index, followed by 19.3% with the Sensex 30 and 12.3% with the Nifty Bharat Bond index. The share of the ETF AUM in the total MF AUM rose to 7.5% in August 2020 compared with less 1% a decade ago. The expansion is the result of higher inflow in the ETF funds coupled with the gains in the underlying indices. In the first five months of the current fiscal year, the ETFs received net inflow of Rs 19,779 crore, which is almost four times of the equity fund flow. In the previous five years, the ETF drew a net inflow of Rs 1.8 lakh crore compared with Rs 4.71 lakh crore in the equity funds.The ETFs fund has added 7.35 lakh folios in the past six months taking the total tally to 25 lakh. This implies a monthly run-rate of 1.2 lakh per month compared with the large cap funds folio run-rate of 92,701.