ETFs on the rise
The past one year (2020-2021) has been mixed and has changed a lot of things around us, passive investing seems to be slowly picking up when comparing AMFI data between May 2020 and May 2021.
- Number of ETFs (excluding gold ETFs) has gone up by 21, from 76 in May 2020
- Net inflows in ETFs (excluding gold) has gone up from Rs 1,017.83 to Rs 5,379.76 crore; a growth of 428%
- Net assets managed by ETFs has gone up from Rs 1,60,312.78 to Rs 2,99,664.67, a rise of 78%
- Overall passive investor segment which also includes index funds saw a growth between April and May 2021, with 7 new schemes collecting more than Rs 2,300 crore in May.
- The rule to benchmark equity fund performance with the TRI (Total Return Index) and the coming of age of funds with the new categorisation, it is tough for fund managers to garner alpha the way they could do earlier.
ETFs being low cost and tracking an underlying index are finding favour among investors who are unsure of market movements and are ready to settle returns posted by indices at a lower risk than betting on actively managed funds in such uncertain times.