Investing Trends

Assets under direction (AUM) of exchange traded finances (ETFs) rose by over nine modern times to Rs 8,100 crore at the end of October 2007, as compared to Rs 869 crore in March 2006.

A majority of this rise is accounted for Benchmark Depository Financial Institution BeEs Fund, whose AUM have zoomed to Rs 7,005 crore. Depository Financial Institution bees tracks the CNX Depository Financial Institution Index.

Experts state a big ball of this rise is owed to the money pumped in by foreign institutional investors (FIIs) as they are using this path to purchase into banking pillory in which they cannot put directly owed to the 20 per cent ceiling on FII investments.

Also in the last 18 months, the assets of ETFs surged on the dorsum of the country's economical growing story. Krishnan Sitaraman, head, monetary fund services and fixed income research, CRISIL, said, "The bull-run inch the Indian marketplace have led to renewed involvement and participation. This have also led to higher valuations, increased volatility and broadening of the stock market, resulting in ETFs and index finances gaining popularity."

ETFs are handbaskets of securities that are traded, like individual stocks, on an exchange. Unlike regular open-ended common funds, ETFs can be bought and sold throughout the trading twenty-four hours like stocks. They are different from common finances in the sense that their units of measurement are not sold to the public for cash.

Instead, the plus direction company (AMC) that patrons the ETF purchases the shares of companies comprising the index from assorted classes of investors such as as authorised participants, big investors and institutions.

In turn, it publishes them a big block of ETF units. Since dividend may have got accumulated for the pillory at any point in time, a hard cash constituent to that extent is also taken from such as investors.

In October, the Greater Bombay Stock Exchange's Sensex and the National Stock Exchange's Bang-Up gained 14.73 per cent and 17.51 per cent, respectively.

Nifty BeES, the country's maiden exchange-traded fund, was launched in January 2002 by Benchmark Common Fund that pulls off only ETFs.

Currently, domestic common monetary fund industry have three gold ETFs. Gold ETFs, like other ETFs, are listed on the stock exchanges and path the domestic terms of gold.