India’s ETF market among global toppers

India has the world’s second-fastest growing exchange traded funds (ETF) market, behind only Japan, with assets more than doubling to $4 billion from $1.9 billion in the past three years, a Bloomberg Intelligence report said. “While that’s mostly due to greater adoption of ETFs to gain low-cost market exposure, about a third of the boost came via the Reliance mutual fund’s CPSE ETF,” the report added.

The CPSE ETF was launched by Goldman Sachs Asset Management India on March 18 2014, and comprises 10 stocks, majority-owned by the government: Oil and Natural Gas Corp Ltd, GAIL (India) Ltd, Coal India Ltd, Rural Electrification Corp Ltd, Oil India Ltd, Indian Oil Corp Ltd, Power Finance Corp Ltd, Container Corp of India Ltd, Bharat Electronics Ltd and Engineers India Ltd.

Currently, Reliance Mutual Fund manages the CPSE ETF after Goldman Sachs exited the mutual fund business in India.

The CPSE ETF has given 47% return to investors in the past year. This of course, was led by strong gains in stocks of state-run companies. The NSE PSU index has gained 44.6% in the last one year, while the Nifty added 19.5%. The CPSE ETF has outperformed the Nifty because 66% of its assets are in energy firms, which have surged with a rebound in oil prices. Brent crude has rallied 21.7% over the past one year.

Individual investors can invest a minimum of ₹5,000 in the CPSE ETF, while the maximum is ₹10 lakh. Non-institutional investors and qualified institutional buyers can invest a minimum amount of ₹10 lakh.