Rs 1 trillion: The asset under management (AUM) of Nifty 50 exchange-traded funds (ETFs) reached this figure recently. That is equivalent to about 50 per cent of the total corpus of all ETFs combined.

Business Standard
24th September

Rs 1 trillion: The asset under management (AUM) of Nifty 50 exchange-traded funds (ETFs) reached this figure recently. That is equivalent to about 50 per cent of the total corpus of all ETFs combined.

  • A large chunk of the funds, of course, has come from the Employees' Provident Fund Organisation (EPFO), which invests about 15 per cent of the fresh money that it receives each year.
  • Increasingly, however, high net worth individuals and retail investors have also begun to invest in ETFs. Fund managers have begun to find it difficult to beat their benchmarks, especially in the large-cap space (read SPIVA reports).
  • That has prompted many investors to make at least 50 per cent of their large-cap allocation in passive products such as index funds and ETFs.
  • Going with an ETF also obviates the need to keep checking if your fund manager is underperforming, and switching to another fund manager from time to time. A broad-based index like the Nifty 50 also suits new investors wanting to get into equities but aren't in a position to select a fund manager.
  • The massive reduction in expense ratios of ETFs in recent years has also driven the shift towards these products. Many Nifty 50 ETFs charge an expense ratio of 10 basis points or less.

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