What is Serge in ETF and Index Fund Investments in India – CNBC TV18

What is Serge in ETF and Index Fund Investments in India – CNBC TV18



The popularity of index funds and ETFs (exchange-traded funds) in India continues to gain momentum by several major factors. Despite some ups and downs in the market’s arrival, such as the decline in passive fund flow from ₹ 7,061 crore in November 2024 increased to ₹ 784 crore in December 2024, some categories remain flexible.

Index fund corner

Sponsored

Name of the scheme 1-year back Invest now Fund category expense ratio
Axis Nifty 50 Index Fund +32.80% Invest now Equity: Big Cap 0.12%
Axis Nifty 100 Index Fund +38.59% Invest now Equity: Big Cap 0.21%
Axis Nifty Next 50 Index Fund +71.83% Invest now Equity: Big Cap 0.25%
Axis Nifty 500 Index Fund , Invest now Equity: Flexi Cap 0.10%
Axis Nifty Midcap 50 Index Fund +46.03% Invest now Equity: Mid Cap 0.28%

For example, the domestic equity index funds led the arrival of ₹ 4,543 crore in December 2024.

Here are the major factors running speed in this place,

Low expenditure ratio

One of the primary drivers is a significant expense ratio offered by index funds and ETFs compared to active funds.

360 An Dhan, Gaurav Doshi, President explains, “These funds usually have expense ratio that is one-third or less than active money, which makes them more attractive to cost-conscious investors.”

The ability to invest with low management fees is a major benefit for both retail and institutional investors.

Increased awareness about active management challenges

Another factor that pursues the development of index funds and ETFs is that awareness awareness about the difficulties facing active managers continuously performs better than the market.

“Investors are becoming more aware of challenges in active management, where very few managers can perform better from the market for a long time,” says Doshi.

Better access through digital platforms

The rise of digital platforms has made it easier for investors to use index funds and ETFs.

According to Doshi, “The ease of investing through online platforms has opened these products to wide audiences.”

-As more investors move towards digital tools for investment, index funds and ETFs are gaining growth speed, especially among retail investors.

Institutional confidence with EPFO

The success of the Provident Fund Organization (EPFO) of employees in using ETFS has helped create institutional beliefs.

“EPFO flows about 15% of its agarmal in Equity ETF, forms a solid demand base,” Doshi notes.

This institutional participation has set a positive example for other big investors and has increased confidence in these investment products.

Retail participation on growth

While institutional investors lead the way, retail participation is also increasing.

“Retail participation is continuously increasing due to improvement in financial literacy and availability of online platforms,” ​​says Doshi.

As more investors understand the benefits of ETF and index funds, retail segment is becoming an important driver of development.

Efficient diversification

ETFs provide investors in a cost effective manner to diversify their portfolio.

Doshi explains, “ETFs provide efficient diversification, especially in areas where active fund options are limited. For example, an IT sector ETF you have to have a lower cost than actively managed funds for the entire IT sector Gives exposure. “

The ability to achieve broad market risk with single tools is attractive, especially for investors in search of efficient portfolio management.

Strategic allocation benefits

Another benefit of ETF is his ability to offer strategic allocation.

“ETFs allow accurate position and adjustment during market hours, leading to them an edge on traditional mutual funds for strategic allocation,” says Doshi.

This flexibility enables investors to take advantage of market status in real time, making ETFs more attractive options for investors on more hands.

Regional and broad market focus

The most popular ETFs in India are about to track wide market indices such as Nifty 50 and Sensx.

“We are also looking at increasing interest in sectoral ETFs, such as focusing on banking and IT, as well as new-yu technology indices and speed-based funds,” Doshi notes. “

Investors are also expanding their horizons to include wide market ETFs such as Nifty Next 50 and Nifty Midcap 150.

Challenges of liquidity and misconceptions

Despite the benefits, there are still challenges to address.

“Liquidity is a major issue for many ETFs, except Nifty 50 ETFs such as high business volumes,” Doshi.

Low trading volumes can result in high impact costs, about which investors need to be aware.

He also suggests that there is a misconception that ETFs are suitable for sophisticated investors only due to concerns about trading volumes and tracking errors.

India’s adoption compared to global trends

Doshi admits that when India is catching, it is still behind the global markets in ETF adoption.

“About 50% of passive investments in the US is equity property, while in India, ETF adoption is still in the early stages,” he says.

However, the Indian ETF market has seen significant growth, expanding more than 30% annually, indicating that India is beginning to align with global trends towards passive investment.

A look at some existing index funds and ETFs in the market

Name of the scheme Benchmark Latest new (₹) Daily AUM (CR.)
360 An ELSS tax saver Nifty 50 Total Return Index 12.8424 (regular), 12.9083 (Direct) 74.47
Aditya Birla Sun Life BSE Sensus Atf BSE Sensex Total Return Index 75.4763 317.29
Aditya Birla Sun Life Crisil IBX 50:50 Gilt Plus SDL April 2028 Index Fund CRISIL IBX 50:50 Gilt Plus SDL Index – April 2028 11.8924 (regular), 11.9341 (Direct) 409.78
Aditya Birla Sun Life Crisil IBX 60:40 SDL+ Aaa PSU Apr 2026 Index Fund CRISIL IBX 60:40 SDL + AAA PSU Index – April 2026 11.5247 (regular), 11.5842 (Direct) 53.01
Aditya Birla Sun Life Crisil IBX 60:40 SDL+ AAA PSU-PR 2025 Index Fund CRISIL IBX 60:40 SDL + AAA PSU Index – April 2025 11.6502 (regular), 11.6976 (Direct) 169.29
Aditya Birla Sun Life Crisil IBX 60:40 SDL+AAA PSU-PR 2027 Index Fund CRISIL IBX 60:40 SDL + AAA PSU Index – April 2027 11.6792 (regular), 11.7436 (Direct) 1,676.82
Aditya Birla Sun Life Crisil IBX Gilt -PR 2029 Index Fund Crisil IBX Gilt Index – April 2029 11.9408 (regular), 11.9839 (Direct) 694.23
Aditya Birla Sun Life Crisil IBX Gilt April 2028 Index Fund Crisil IBX Gilt Index – April 2028 11.3371 (regular), 11.3952 (Direct) 29.28
Aditya Birla Sun Life Crisil IBX Gilt April 2033 Index Fund Crisil IBX Gilt Index – April 2033 10.9232 (regular), 10.9526 (Direct) 97.03
Aditya Birla Sun Life Crisil IBX Gilt-April 2026 Index Fund Crisil IBX Gilt Index – April 2026 11.7386 (regular), 11.7813 (Direct) 290.22

,Source: AMFI)

,