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Benchmark to unveil more exchange traded
funds based on various indices
Sujoy
Manna
Mumbai, Jan 7: Benchmark Asset Management Company
(AMC) which announced the launch of the country’s first exchange
traded fund (ETFs) on Monday, plans to offer a range of such
ETFs based on various indices in the near future. The Nifty
BeES, annouced on Monday is based on the S&P CNX Nifty.
| Nifty
BeES units on NSE today |
Units of Nifty BeES will get listed on
the capital market segment of NSE on January 8, 2001.
With this, investors of ETF would for the first time be
able to trade in the whole of Nifty on real time basis.
Nifty Nifty BeES will track the S&P CNX Nifty Index.
Proceeds collected under Nifty BeES will be invested in
all the 50 stocks which constitute the index. Contributed
primarily by the promoters of the AMC, the fund has collected
Rs 21 crore till date. |
Also, the AMC plans to approach other index providers to
construct and maintain relevant indices on which the ETFs
would be structrued. Included in the list of indices are the
S&P CNX 500, CNX Nifty Junior and some sectoral indices.
ETFs are innovative products that provide exposure to an index,
or a basket of securities that trade on the exchange like
a single stock.
Speaking to The Financial Express, Benchmark
AMC executive director Rajan Mehta said: “We intend to introduce
more ETFs on various other indices in the near future. Currently,
we are looking at many indices to ascertain the practicality
of using it in an ETF.”
“Depending on investors’ response, we intend to come out with
ETFs based on indices as demanded by investors,” Mr Mehta
added.
The AMC will construct a suitable model on the basis of which
the index provider will construct the relevant required indices.
Currently, India Index Services & Products Ltd (IISL)
and The Economic Times have their own indices.
An ETF is a more efficient vehicle than an open-ended fund.
In ETFs, investors can divest, or invest at real time prices
rather that at the NAV which is declared at the end of the
day in case of index funds. Moreover, in ETFs, there is in
kind of creation, or redemption, which saves hidden costs
like brokerage, or impact cost, for the fund. In ETFs, tracking
errors like different prices for investing and alloting units
and maintainance of cash to meet redemptions are avoided.
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