Assets Under Management AUM

HDFC AMC bets on passive funds, deposits 9 ETFs with Sebi

NEW DELHI: HDFC Asset Management Company Ltd, India’s second-largest asset manager, has filed documents for nine exchange-traded funds (ETFs) with the Securities and Exchange Board of India (Sebi), according to reports available on the market regulator’s website.

The AMC has requested the following ETFs: Nifty Growth Sectors 15, Nifty IT, Nifty Next 50, Nifty Private Bank, Nifty100 Low Volatility 30, Nifty100 Quality 30, Nifty200 Momentum 30, HDFC NV 20 and HDFC Nifty 100.

“The fundamental belief is that assets will outperform liabilities over the next three to five years. At the same time, the financialization of assets is going to be massive in India, so there will be a need for all kinds of products. Therefore, investors will also be looking to have money in passive assets, ”said one person with direct knowledge of the matter who declined to be identified.

The mutual fund company has started to focus on passive investing, depositing nine ETFs and two index funds in the past 15 days. The company had submitted its last application to participate in a plan, regardless of its category, in December 2018.

Additionally, according to Sebi’s website, from early 2020 to late August, HDFC only launched three programs, one of which was an index fund and the other an ETF.

HDFC AMC now offers four ETFs – Gold, Nifty50, Sensex, Bank – with assets under management worth Rs 4,045.25 crore as of September 30. There are index funds on offer – Nifty50 Equal Weight, Nifty50 and Sensex – with total assets under management of Rs 6,995.84 crore. It recently launched a new fund offering for a developed global index fund of funds (FoF).

Overall, the fund company manages around Rs4 lakh crore in assets.

Many Indians have joined the investor movement since the start of the covid-19 pandemic. For those looking for simpler solutions, passive funds offer the level of simplicity and performance that can match that of an index.

An index fund works like a mutual fund, in which a fund manager creates a portfolio that replicates an index, which can be the Sensex or the Nifty. There are over 30 funds available in the market only on the Sensex and Nifty indices. However, the problem with index funds is that you can only buy them at the end of the day’s net asset value (NAV).

ETFs remove this limitation, as they can be bought at any time during market trading hours. In addition, ETFs must be listed on the stock exchange.

Today, ETFs are available in all asset classes – stocks, debt and gold. Within stocks, an investor has the option of choosing from market capitalization based ETFs, sector ETFs, or smart beta ETFs. Even though the Debt ETF is at a very early stage in India, investors have a choice of liquid Debt ETFs, Gilt and PSU.

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