The asset base of the 63 exchange-traded funds (ETFs) including gold, equity, debt and global ETFs surged more than 50 per cent year-to-date thanks to higher inflows into equity-oriented ETFs.

According to latest data, the assets under management of ETFs stood at ₹51,276 crore as on April 2017.

The total asset base of the equity-oriented ETFs tracking Nifty 50, S&P Sensex and CPSE Index grew more than 70 per cent year-to-date on higher fund flows from the provident fund organisations, insurance companies and the Centre’s disinvestment programme.

A large chunk of money came from the Employees’ Provident Fund Organisation (EPFO) as they have decided to plough 10 per cent of incremental inflows in to ETFs since September 2016. It was 5 per cent earlier. In 2016-17, the EPFO infused ₹14,982 crore into the stock market through SBI, UTI and CPSE ETFs.

Muted volume growth Despite this surge in assets, ETFs’ traded volume on the exchanges have witnessed muted growth over the period. Data compiled from NAVIndia shows that there has been no significant pick up in the traded volume in the ETFs listed on the NSE. Total traded volume in the month of May stood at ₹1,875 crore compared with ₹1,961 crore in December 2016.

This discrepancy can be explained by the fact that the insurance and provident fund organisations have bought the units of ETFs directly from the fund houses. The Centre’s divestment programme through further fund offer of CPSE ETF also increased the asset base of the ETFs. Since the corporates hold majority of shares (about 83 per cent equity ETFs), most of the transactions are done with fund houses themselves.

According to the latest AMFI data (as of March 2017), the share of individual investors including HNI and retail investors was only 10 per cent in the equity ETFs. However, it was higher in gold ETFs where they hold 54 per cent. Since larger investors tend to churn their portfolios less, volumes in ETFs could also be lower.

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