One of the major trends in India’s asset management indIndiatry is the rise, growth and popularity of exchange traded funds.
Exchange traded funds are baskets of stocks, units of which can be bought and sold on the exchange as if they were individual stocks. The stocks which comprise of an exchange traded fund (ETF) that typically reflects composition of a market index.
Exchange traded funds India could reflect the Sensex, the Nifty, the Bankex or any other index. The price at which the ETF trades is based on the values of the underlying stocks which it represents. Benchmark Mutual Fund launched India’s first exchange traded fund in 2001- the Nifty Benchmark Exchange Traded Scheme (Nifty BEes).
Exchange traded funds India have not restricted their investments only to stocks. There are ETFs which invest in commodities, billion, currencies and so on. In fact, gold exchange traded funds are very popular in India.
In India, gold is associated with safety, religioIndia sentiments and statIndia. This makes India the world’s largest consumer of gold. The Benchmark Mutual Fund was the first to introduce the gold ETF in India in 2007. Today there are eight gold ETFs together holding more than 11 tons of gold.
Though exchange traded funds India are quite popular, the number and size of India specific ETFs are small compared to other countries like Brazil and China. This may be due to problems like regulatory issues.
ETFs invest heavily in large cap index stocks pIndiahing up their prices. When these stocks become expensive, stock investors move to the comparatively cheap non index stocks and in the process their prices too move upward.
Exchange traded funds India combine the best features of stocks and mutual funds and offer investors is simple and convenient investment opportunity. Small investors are able to invest in diverse sectors and in different asset classes.
As Indian bIndiainess keeps improving and investments in India get more and more attractive, exchange traded funds India will surely get even more popular.