Exchange Traded Funds(ETFs)

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What is an ETF?

ETFs are essentially index funds that are listed on an exchange and track the price performance of the target index closely. The ETF trading value is based on the net asset value (NAV) of the underlying stocks in the target index. E.g., a Nifty ETF will look to replicate CNX Nifty returns.

ETFs are popular world over with nearly 60% of trading volumes on the American Stock Exchange (AMEX) captured by all types of ETFs. At the end of June 2011, the global ETF industry comprised 2,825 ETFs from 146 providers on 49 exchanges around the world with total assets of US$1.49 trillion (Source: www.ifaonline.co.uk).

The ETF advantage

  • Trade like stocks

    - You can buy and sell an ETF during market hours on a real time basis as well as put advance orders on purchase such as limits or stops. In case of conventional mutual funds, purchase or sale can be done only once a day after the fund NAV is calculated.
  • Low cost of investment

    - The passive investment style with low turnover helps keep costs low. ETFs are known to have among the lowest expense ratios compared to others schemes.
  • Diversification benefit

    - In case of Nifty ETF, you own the complete basket of 50 stocks and remain diversified.
  • Simple and transparent

    - The underlying securities are known and quantities are pre-defined (In case of conventional mutual fund schemes, one needs to wait for the monthly factsheet). No form filling is required if you transact in the secondary market. Investment can be made directly from the fund house or the exchange.
  • Supports small ticket investments - ETFs are a great tool for investors wanting to start with a small corpus. The minimum ticket size is 1 unit (in case of IIFL Nifty ETF, 1 unit is approximately 1/10th of Nifty level, i.e Rs500, when Nifty is at 5000). Premium and discount also tends to be higher in the futures segment, than in ETFs.
  • ETFs are taxed like stocks - Investors can take advantage of special rates for short term and long-term capital gains.
Target audience
  • Long term investors
  • First time investors
  • Investors looking for a low cost diversified portfolio
  • Traders who do not have enough capital to invest in index futures
  • Institutional investors looking to temporarily park cash during portfolio transition
  • Arbitrageurs to carry out operations with low impact cost
Concept of tracking error

The extent to which the NAV of the scheme moves in a manner inconsistent with the movements of the underlying Index on any given day or over any given period of time due to any cause or reason whatsoever including but not limited to expenditure incurred by the scheme, dividend payouts if any, all cash not invested at all times as it may keep a portion of funds in cash to meet redemption, purchase price different from the closing price of securities on the day of rebalance of Index, etc.

Points to note before investing in ETFs
  • Invest in ETFs with ample secondary market liquidity - Fund houses do depend on market makers and arbitrageurs to maintain liquidity to keep the price in line with the actual NAV.
  • ETFs track the target index – Any investor wanting an exposure to a particular target index like Nifty will do well by investing in ETFs. The objective of ETF is to be the index rather than beat the Index.
  • Always invest in key benchmarks ETFs rather than sectoral funds - Investing in sectoral ETFs is prone to higher volatility compared to key benchmark ETFs like Nifty.
  • Cost of trading on the exchange - Investor will have to bear the cost of brokerage and other applicable statutory levies e.g, Securities Transaction Tax, etc, when the units are bought or sold on the stock exchange.
ETF Performance
Scheme Name AUM(Rs.in Cr) NAV(Rs.) 1w % 3m % 6m % 1y % 3y % Since Incp.
Reliance ETF Hang Seng BeES 6.60 3,271.87 0.18 4.71 9.82 32.42 8.76 12.56
Motilal Oswal NASDAQ-100 ETF 73.27 457.48 [0.26] 6.07 13.17 26.77 16.88 22.99
Kotak NV 20 ETF 2.86 49.07 [2.41] 0.08 2.07 18.13 0 15.25
Reliance ETF NV20 18.15 491.48 [2.42] -0 2.12 17.99 0 10
Reliance ETF Consumption 13.81 51.35 [1.21] 2.75 2.32 17.99 13.97 17.14
ICICI Pru NV20 ETF 0.89 48.25 [2.37] 0.02 2.09 17.63 0 15.35
HDFC Sensex ETF 14.79 3,567.87 [2.64] 2.37 3.56 15.02 0 15.64
LIC MF ETF Sensex 338.74 355.95 [2.65] 2.36 3.60 15.01 0 13.28
UTI-Sensex ETF 1,976.30 357.30 [2.65] 2.38 3.58 15 0 12.79
SBI ETF SENSEX 9,143.16 359.67 [2.64] 2.37 3.55 14.95 8.94 14.16
Reliance ETF Sensex 33.33 361.73 [2.64] 2.37 3.56 14.94 8.98 8.54
ICICI Pru Sensex ETF 2.78 361.79 [2.57] 2.44 3.66 14.92 8.94 17.47
IDFC Sensex ETF 0.83 350.38 [2.63] 2.31 3.45 14.83 0 14.70
Kotak Sensex ETF 11.80 350.46 [2.65] 2.32 3.42 14.71 8.72 9.42
Edelweiss ETF - Nifty Bank 1.34 2,603.18 [2.73] 3.25 [0.06] 13.75 0 20.92
Kotak Banking ETF 3,759.34 262.52 [2.74] 3.21 [0.13] 13.64 12.36 10.11
Reliance ETF Bank BeES 2,450.37 2,612.28 [2.74] 3.22 [0.11] 13.61 12.15 20.06
SBI ETF Nifty Bank 735.58 258.81 [2.74] 3.21 [0.13] 13.55 12.35 11.44
Edelweiss ETF - Nifty 50 2.93 11,074.31 [2.68] 1.36 2.22 13.13 9.57 10.43
UTI-Nifty ETF 6,077.22 1,089.15 [2.68] 1.38 2.21 13.03 0 13.07
SBI ETF Nifty 50 29,545.65 105.85 [2.68] 1.40 2.24 13.02 0 8.44
Reliance ETF Nifty BeES 893.24 1,088.91 [2.68] 1.40 2.24 13.02 8.80 16.26
HDFC Nifty ETF 54.63 1,079.37 [2.68] 1.43 2.26 12.97 0 15.38
Invesco India Nifty ETF 1.83 1,102.44 [2.68] 1.33 2.12 12.94 8.98 10.99
Kotak Nifty ETF 537.13 106.74 [2.68] 1.37 2.17 12.91 9.01 10.98
ICICI Pru Nifty ETF 844.91 108.38 [2.66] 1.39 2.20 12.89 9.02 13.82
Aditya Birla SL Nifty ETF 140.55 112.40 [2.68] 1.29 2.17 12.87 9.09 10.90
Edelweiss ETF - Nifty Quality 30 3.97 262.43 [0.79] 2.55 5.74 12.85 0 12.70
LIC MF ETF NIFTY 456.99 107.58 [2.69] 1.33 2.16 12.84 0 13.39
Reliance ETF Dividend Opportunities 17.75 29.23 [1.03] 1.16 4.38 12.84 12.56 13.82
IDFC Nifty ETF 3.46 106.51 [2.67] 1.38 2.17 12.81 0 13.33
Quantum Nifty ETF 4.30 1,058.13 [2.68] 1.33 2.08 12.76 8.82 11.34
LIC MF ETF Nifty 100 295.95 110.35 [2.80] 0.64 0.95 12.19 0 18.66
SBI BSE 100 ETF 1.50 109.37 [2.74] 0.60 0.48 12.01 9.45 8.43
ICICI Pru Nifty 100 ETF 4.64 113.65 [2.71] 0.60 0.84 11.73 9.30 17.42
Motilal Oswal M50 ETF 21.15 100.83 [2.68] 1.29 1.71 11.54 7.83 8.25
Reliance ETF Nifty 100 7.65 110.46 [2.79] 0.42 0.50 11.23 8.83 14.27
Reliance ETF Shariah BeES 2.99 243.95 [2.03] [1.31] [2.28] 9.89 9.30 14.61
Aditya Birla SL Sensex ETF 11.17 335.02 [2.80] [1] [2.20] 9.58 0 10.87
Reliance ETF Junior BeES 277.04 287.71 [3.28] [3.36] [5.22] 8.65 13.02 22.68
SBI ETF Nifty Next 50 12.05 284.63 [3.28] [3.43] [5.32] 8.56 13.73 13.33
HDFC Gold ETF 458.53 2,860.88 [1.23] 1.67 4.78 6.65 3.18 5.63
IDBI Gold ETF 69.09 2,940.80 [1.19] 1.82 5.14 6.22 3.35 0.21
Canara Robeco Gold ETF 44.99 2,869.96 [1.81] 1.06 4.14 6.18 3.19 0.35
UTI-Gold ETF 367.55 2,799.17 [1.23] 1.75 4.98 5.81 3.14 10.18
Reliance ETF Gold BeES 2,440.68 2,783.94 [1.30] 1.67 4.81 5.70 3.02 10.16
AXIS Gold ETF 85.57 2,755.85 [1.22] 1.71 4.88 5.58 1.97 4.29
Kotak GOLD ETF 405.77 277.14 [1.23] 1.70 4.91 5.52 2.86 11.04
Invesco India Gold ETF 34.14 2,866.57 [1.23] 1.70 4.86 5.50 2.93 6.71
Aditya Birla SL Gold ETF 71.17 2,908.85 [1.23] 1.70 4.81 5.50 2.94 3.86
Quantum Gold Fund (G) 55.83 1,384.45 [1.23] 1.69 4.81 5.48 2.87 8.25
SBI ETF Gold 725.12 2,844.84 [1.22] 1.65 4.74 5.31 2.84 7.48
ICICI Pru Midcap Select ETF 3.67 66.62 [4.23] [5.90] [9.61] 5.08 0 15.78
ICICI Pru Gold ETF 101.00 285.26 [1.22] 1.70 4.85 4.77 2.75 5.44
Motilal Oswal Midcap 100 ETF 22.95 19.14 [3.65] [4.78] [6.83] 2.82 12.19 12.98
Reliance ETF Infra BeES 17.45 330.50 [3.95] [4.33] [8.05] 0.25 1.22 [1.75]
Bharat 22 ETF 5,710.24 35.54 [2.88] [1.63] 0 0 0 [5.60]
UTI-Nifty Next 50 ETF 45.73 284.10 [3.28] [3.25] [5.06] 0 0 [0.36]
AXIS Nifty ETF 7.11 1,059.62 [2.67] 1.37 2.15 0 0 9.48
DSP BR Liquid ETF - Reinvest (Div-D) 7.57 1,000.00 0.04 0 0 0 0 0.40
ICICI Pru Nifty Low Vol 30 ETF 0.48 84.01 [1.57] 3.63 6.11 0 0 14.25
Reliance ETF Liquid BeES 1,951.44 1,000.00 0 0 0 0 3.03 5.60
Reliance ETF Long Term Gilt 20.58 16.78 [0.05] 1.32 [2.59] [0.40] 0 4.64
LIC MF G-Sec Long Term ETF 70.44 16.65 [0.06] 1.21 [2.67] [0.56] 6.18 6.56
SBI ETF 10 Year Gilt 2.12 158.13 0.26 1.24 [3.69] [1.49] 0 4.37
CPSE ETF 5,024.17 27.42 [2.39] [7.72] [7.36] [7.48] 3.61 11.50
Kotak PSU Bank ETF 126.21 273.09 [4.74] [14.08] [31.85] [27.48] [8.23] 0.69
Reliance ETF PSU Bank BeES 120.26 302.86 [4.73] [14.08] [31.88] [27.52] [8.25] 1.48
 
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Disclaimer All the contents of the videos are provided by the DSP Blackock. IIFL Securities does not provide any representation/s or warranty/ies, express or implied, as to the accuracy, completeness or reliability of any information compiled herein, and hereby disclaims any liability with regard to the same, including, without limitation, any direct, indirect, incidental or consequential loss. Investors are requested to read the Scheme Information Document, Statement of Additional Information and the Key Information Document as well as operational requirements of the various scheme and mutual fund investment products carefully before investing in any mutual fund investment products.