India's first ETF was launched in December 2001, which was based on Nifty 50.
ETFs are essentially Index Funds that are listed and traded on exchanges like stocks. An ETF is a basket of stocks that reflects the composition of an Index, like Nifty 50. The ETFs trading value is based on the net asset value of the underlying stocks that it represents.
Currently there are 13 ETFs on Nifty 50 index listed in India.
“India is catching up with the global trend in ETF segment, where ETF industry is worth USD 3.2 trillion as on June 30, 2016. NSE is talking about ETFs for more than a decade now, with hundreds of roadshows completed across the length and breadth of the nation. We are pleased to see a surge in investors’ interests in ETF products," said Chitra Ramkrishna, MD & CEO, NSE.
Of the 45 Equity ETFs traded in India, 35 are benchmarked to Nifty family of indices. This indicates the widespread acceptability of Nifty indices.
NSE is continuously engaging with investors to ensure a larger participation from the retail segment in ETF products.
The exchange informed that it has conducted around 950 awareness programs for retail investors in the current calendar year. Many such programs were conducted in association with the market regulator Securities and Exchange Board of India (SEBI).
ETFs are group of securities which are traded like individual stocks on an exchange. ETFs can track equity indices, bonds, commodities etc. A small time retail investor can buy ETFs for as little as about Rs.100 and these can be then bought and sold as a share on the exchange with a minimum trading lot of one unit and carry lower management costs when compared to mutual funds.
There is a good demand for Nifty 50 ETF amongst ETF issuers in the international markets also, the NSE said.
Today, Nifty 50 has the highest number of India focused ETFs outside India.
"India-specific products tracking Nifty indices are very popular among the global investors. In the past one year, we have seen very strong demand for Nifty 50 based products in Asian countries including Korea, Taiwan, Japan and Hong Kong," said Mukesh Agarwal, CEO of IISL, an NSE group company.
ETFs covering Nifty family of indices are traded in 19 exchanges covering 16 countries.
Taiwan Stock Exchange is one of the latest exchanges to offer ETFs on Nifty 50.
NSE’s subsidiary, IISL, constructs and maintains such indices. IISL is currently working on several other indices, which can be used for third party products like ETFs.
Image: Wikimedia Commons
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