The assets under management (AUM) of Nifty 50 index-linked exchange-traded funds (ETFs) have witnessed a seven-fold increase to ₹8,533 crore at the end of March 31, from ₹1,251 crore at the end of the previous financial year, said a press release from the NSE.
Pension money helps “Investor confidence has increased in equity-based exchange-traded funds during the last financial year. A surge in ETF volumes in FY2015-16 supports this trend,” the bourse said in a release.
According to market experts, the main reason for the huge increase in the Nifty 50 ETF asset base is pension money. The total amount invested by the EPFO in the ETF of Nifty 50 and Sensex-based index as on March 31 this year was ₹6,577 crore, Jayant Sinha, Union Minister of State for Finance, had told Parliament in April.
“The Centre last year had allowed an incremental fund flow of 5 per cent EPFO funds in ETFs. It was then decided that initially 75 per cent of the corpus would be invested in SBI Nifty ETF and the rest in SBI Sensex ETF. That was the main reason for the rise in the AUM of Nifty 50 ETFs,” said an analyst based out of Chennai.
According to the NSE, total assets of ETFs based on NSE indices have risen to ₹12,865 crore as of March 31, up from ₹7,055 crore a year ago. “The total AUM of equity ETF industry has reached ₹15,066 crore as on March 31, 2016. It was at ₹7,231 crore on March 31, 2015,” NSE said. A total of 33 out of 43 equity ETFs traded in India are benchmarked to the Nifty family of indices. Of these 33, 13 ETFs are benchmarked to the Nifty 50 Index and five to the Nifty Bank index.