On October 23rd, 2014, we updated our
By continuing to use LinkedIn’s SlideShare service, you agree to the revised terms, so please take a few minutes to review them.
SPDRs and QQQs (ETF on Nasdaq 100) are the most actively traded ETFs
Globally, there are currently 348 ETFs managed by 43 managers across 31 exchanges.
On February 28 , 2005 the ETF market globally was $313.60 billion ( Source: MSDW )
ETFs launched across the world include Japan in September 2001 and in Korea and Singapore in 2002
Nearly 60% of trading volumes on American Stock Exchange comprises of ETFs
History of ETFs
S&P CNX Nifty Index
India’s premier benchmark index introduced in November 1995 and was developed as a basis for introducing index based derivatives
Only companies having a high degree of liquidity defined in terms impact cost are included as constituents of the Index
Nifty is calculated using the market capitalisation weighted method
Impact cost of the S&P CNX Nifty is 0.10% for a portfolio size of Rs.5 million
Represents about 66% of total market capitalisation
Correlation with Morgan Stanley Capital International (MSCI) India Index is about 97% over last 3 years
Attracts most of the Futures of over $ 1 bn daily. The underlying trades over $ 1.2 bn daily.
ETFs Growth - Global Source: Bloomberg, Morgan Stanley Research
How Nifty B e ES work Secondary market Seller Buyer NSE Nifty BeES Cash Nifty BeES Cash Primary market Buy / sell Market making / Arbitrage Fund Authorised Participants / Financial Institutions Creation in-kind Redemption in-kind
ETF Liquidity Futures Underlying Equity (Creation / Redemption Process) Intra-day Buy/Sell ETF Liquidity The notional liquidity of an ETF is the average volume of the underlying.
Simple – Can be bought/ sold on NSE like a share…real-time
Economical – No load scheme. Annual expense one of the lowest for any mutual fund scheme in India.
Diversification – It’s a cost efficient way to invest in a basket of securities
Equitable Structure – Long term investors insulated from short term trading activity
Transparent – Investors have access to information on the portfolio constituents represented represented on a daily basis
Premium/Discount to NAV – Between +&-0.5%
(Source: Business Standard)
Nifty B e ES Advantages
NSE SYMBOL : NIFTYBEES
Reuters – NBES.NS
Bloomberg – NBEES.IN
Moneyline Telerate – IN;NBFN
TOTAL EXPENSE RATIO:
0.80% (upto Rs.1000 mn)
0.70% (next Rs.4000 mn)
0.65% (over Rs.5000 mn)
ENTRY/ EXIT LOAD: NIL
Nifty B e ES Details
Tracking Error Source: www.mutualfundsindia.com Annualized Six-month Tracking Error (TE) calculated as on July 08, 2004
Nifty B e ES vs. Open ended Index funds Does not insulate long term investors from short term investor activity Insulates long term investor from short term trading activity Structure Fund Fund / Stock market Liquidity Daily Indicative Real time NAV Average Best Tracking No Yes Ability to lend units No Yes Hedging Tool No Yes Trade at any brokerage firm No Yes Low Expense Ratio No Yes Traded throughout the day Traditional Open Ended Index Funds Nifty B e ES Attribute
“Nifty BeES seems the best index fund when it comes to all three parameters; Entry loads, Expense ratios and Tracking Error.It is India’s first and only Exchange Traded Fund or simply put, a next generation index fund.” - Business World, September 30, 2002 “Investing in Nifty BeES is a comparatively better method of participating in any market rally” - The Economic Times, December 2, 2002 Independent Research Review