A study on Exchange Traded Funds (ETFs) in India - March 2024
Over the past few years, Exchange Traded Funds (ETFs) seem to have been adopted by many Indian investors since they provide exposure to broad segments and sub-segments of Indian markets.
ETFs are the funds that trade on exchanges, generally tracking a specific index. ETFs provide investors with exposure to broad segments and sub-segments of the equity markets, commodities and debt thus enabling efficient asset allocation consistent with the investor’s financial needs, risk tolerance, and investment horizon.
Presenting a few key data points around ETF adoption in India.
- ETF share of the overall AUM of the Mutual Fund Industry as on March 2024:
ETFs constitute close to 13% of the overall mutual fund industry AUM. [1] ETFs occupy a share of ₹6.95 lakh crore out of ₹53.40 lakh crore of the total AUM of the mutual fund industry.
- Growth in retail investor folios in ETF Schemes:
[2] The rise from 5.33 lakh accounts (across equity and debt ETFs) in 2017 to 1.25 crore in 2023 reflects a broader acceptance and understanding of ETFs among retail investors.
- Trading Volume of ETFs:
Trading Volume is a measure of the market’s activity and liquidity over a set period of time. [3] The trading volume has surged from ₹26,139 crore in FY 2016-17 to ₹1,83,676 crore in FY 2023-24. This is an increase of about 600%.
4. AUM of ETF schemes across different asset classes:
Equity ETFs:
- [4] The AUM for Equity ETFs has consistently increased, going from ₹43,234 crores in March 2017 to ₹5,63,176 crores in March 2024.
- This category has shown the most substantial growth, compared to the other asset classes such as Debt and Gold
Debt ETFs:
Debt ETFs have also seen significant growth, from ₹1,497 crores in March 2017 to ₹96,163 crores in March 2024.
Gold ETFs:
- Gold ETFs have grown steadily, from ₹5,480 crores in March 2017 to ₹31,224 crores in March 2024.
- Between 2017 and 2024, AUM of Gold ETFs has increased by about 470%.
5. Number and AUM of Equity ETF Schemes across Broad Based Indices:
[5] The study reveals that the ETFs based on the top three broad based indices i.e Nifty 50, Nifty Next 50 and Nifty Midcap 150 alone contribute more than 99% of total AUM among broad based indices in the Equity ETF schemes.
Conclusion:
The study reveals that ETFs constitute close to 13% of the overall AUM of the mutual fund industry. Similarly, a data driven analysis has been done on the growth of retail investor folios in ETF schemes, trading volume of ETFs, AUM of ETF schemes across different asset classes, and the number and AUM of different ETF schemes across broad based indices.
Source:
[1]: AMFI Annual Report
[2],[3],[4],[5]: Nifty Passive Insights
Mutual Fund investments are subject to market risks, read all scheme related documents carefully
Please note that this article or document has been prepared on the basis of internal data/ publicly available information and other sources believed to be reliable. The information contained in this article or document is for general purposes only and not a complete disclosure of every material fact. It should not be construed as investment advice to any party in any manner. The article does not warrant the completeness or accuracy of the information and disclaims all liabilities, losses and damages arising out of the use of this information. Readers shall be fully liable/responsible for any decision taken on the basis of this article or document.
Published on July 5 2024
