Passive gains

Although exchange traded funds (ETFs) have been in vogue since 2001, they haven’t caught investor fancy despite their potential. One of the reasons being, the Indian markets have been favourable for active funds to consistently beat their benchmarks significantly. However, in the past two years, two ETFs have found favour and investor interest – the Reliance CPSE ETF and the SBI ETF Nifty 50 for very different reasons. While the SBI ETF Nifty 50, which manages assets of Rs 17,188 as of March 2017, has found favour due to the EPFO money that it manages. The CPSE ETF has gained because of the divestment route taken by the government through this ETF with corpus crossing Rs 9,000 crore. Suddenly, there is a lot of interest in passive funds, which is making several investors sit up and consider investing in them because of the lower risk involved when investing in ETFs over active funds. With the government having tasted success with the CPSE ETF, it is considering the same route to boost its disinvestment plans, which could see more such ETFs being launched. For investors with low risk appetite, the opportunity of investing in ETFs just got more attractive.

olmdesk@outlookindia.com