ETFs catch on, find traction far and wide

Bundi (Rajasthan), Baran (Rajasthan), Damoh (Madhya Pradesh), Dhar (Madhya Pradesh), Anuppur (Madhya Pradesh), Sitamarhi (Bihar), Karauli (Rajasthan) and Sheikhpura (Bihar) were other newly added top ten cities in terms of gross traded value for ETFs, the National Stock Exchange (NSE) said.

Meanwhile, various other cities including non-metros have shown manifold growth in investments in ETFs.

Raigarh in Maharashtra with a two-year average annual growth rate of 552 per cent topped the list of the fastest growing cities in terms of average daily value of ETFs.

Raigarh is followed by Vishakhapatnam and Ahmedabad with a 2-year average annual growth of 423 per cent and 76 per cent, respectively.

Thane (70 per cent), Mumbai (54 per cent), Delhi (41 per cent), North 24 Parganas (32 per cent), Hyderabad (30 per cent), Kolkata (12 per cent) and Bangalore (3 per cent) are the other top-10 cities on the list.

The reach and growth of ETFs to far corners of India can be attributed to the government issue of Central Public Sector Enterprise Exchange Traded Fund (CPSE ETF) which has generated high returns for the investors.

"The government has been using ETF route for disinvestment and in that context the last two issues of CPSE ETF have been very well received by retail and institutional investors and heavily oversubscribed," Mukesh Agarwal, CEO, India Index Services and Products, a group company of NSE, told PTI.

Besides, he said more investor awareness and education campaigns as well as promotional activities by mutual funds have helped deepen investments in ETFs.

ETFs are group of securities that are traded like individual stocks on an exchange and carry lower management costs than mutual funds.

CPSE ETF comprises scrips of 10 public sector units.

The government had raised Rs 6,000 crore in the second tranche of CPSE ETF in January and Rs 3,000 crore from the first tranche in March 2014.