On 30th July 2024, Madhabi Puri Buch, Chairman, Securities and Exchange Board of India (SEBI) launched India’s first website for passive funds at the National Stock Exchange (NSE), to facilitate a comprehensive platform for retail investors and enable them to easily access information and understand the Indian passive industry.
- Apart from launch of website for passive funds, she also unveiled report on the capital markets titled “Indian Capital Markets: Transformative shifts achieved through technology and reforms”.
- The report is developed by NSE Data Analytics, which covered major technological advancements and regulatory reforms that have impacted the Indian capital markets.
About the website:
i.It provide deep insights on aggregate industry data, fund-wise data, and screeners for selecting funds based on different parameters such as: underlying index, Assets Under Management (AUM), tracking error, tracking difference, trading volume, Total Expense Ratio (TER), comparison of funds, among others.
ii.The primary objective of the website is to provide investors with all the important information and insights to review and evaluate the passive fund industry and its various products effectively.
- It will offer comprehensive information on passive funds such as: Exchange Traded Funds (ETFs) and index funds.
iii.As per the website, Nifty indices served as the benchmark for 145 ETFs listed in India and 16 ETFs listed abroad as of 31st March, 2024.
iv.The website also shows that as of June 2024, the cumulative AUM of passive funds is Rs 10.22 lakh crore, of which Rs 7.79 lakh crore AUM of ETF and remaining Rs 2.43 lakh crore AUM of index fund.
Points to Note:
i.1st passive fund in India was launched in 1999, but its actual growth started from August, 2015.
ii.At present, there are around 430 passive mutual funds. As of March 2024, the number of folios for the ETF are 1.88 crore whereas for index funds these are 75.76 lakh.
Key Findings of the Report – Indian Capital Markets:
i.The report highlighted 5 important reforms such as: the T+1 settlement cycle, Application Supported by Blocked Amount (ASBA) for secondary trading, collateral segregation, two-way portability among Clearing Corporations through Software as a Service (SaaS) module, and the establishment of the Investor Risk Reduction Access (IRRA) platform.
- All these reforms aim to boost market efficiency, investor protection, and overall system resilience.
ii.The report includes finding from a retail investor survey across 12 cities in India and a nuanced analysis of benefits to investors.
- It showed the benefits of latest reforms and recommended potential annual investor benefits of nearly Rs 3,900 crores with complete adoption of key measures such as: Initial Public Offering (IPO) listings and the ASBA system.
iii.As per the report, equity mutual fund schemes AUM share has increased significantly from about 27% (in March 2013) to 62% (in March 2024).
- The share of ETF and FoF has also increased from about 2% to 13% in the same time period.
iv.The report also revealed that, mainly concentrated with institutional investors, the share of passive mutual fund schemes in AUM increased from 7% (in March 2020) to 17% (in March 2024).
About Securities and Exchange Board of India (SEBI):
Chairman- Madhabi Puri Buch
Headquarter- Mumbai, Maharashtra
Established– 1992
About National Stock Exchange (NSE):
Chairperson- Girish Chandra Chaturvedi
Headquarters- Mumbai, Maharashtra
Founded in – 1992