Edelweiss AMC’s two ETFs converted into index funds, effective today

Passive investing, which includes index funds and ETFs, has become prominent among first-time investors in India as it is the most basic form of investing in mutual funds. Both instruments essentially reflect an index.

An index fund works like a mutual fund scheme, in which a fund manager creates a portfolio that mimics an index, which could be Sensex or Nifty. But index funds can buy them only on the basis of end-of-day net asset value (NAV).

Edelweiss ETF – Nifty 50 was initially launched in 2015, while Edelweiss ETF – Nifty 100 Quality 30 was launched in 2016. As of August 31, he had the property value of ₹3 crore and ₹12 crores respectively under management.

With the recent changes, Edelweiss Nifty 50 Index Fund will be benchmarked to Nifty 50 Total Return Index (TRI), and Edelweiss Nifty 100 Quality 30 Index Fund will track Nifty 100 Quality 30 TRI.

According to Niranjan Awasthi, Head-Product Marketing and Digital Business, Edelweiss AMC, the focus of the company is now on index funds while filing for new equity side schemes.

“We have launched our large and mid-cap, filed financial services fund and healthcare fund on the index platform as it provides easy access to retail investors. Hence, these two funds (Nifty 50 ETF and Nifty 100 Quality 30 ETF) were quite old ETFs, and we thought converting them would be a prudent choice, and most of our investors also gave feedback that they should be set up as index funds. Is required. SIP in these funds” said Awasthi.

Awasthi believes that with this change he is expecting a huge jump in the number of investors in these two index funds.

According to experts, for most retail investors, index funds are a better option than ETFs, as they are readily available. For index funds, investors are not required to open a demat account or pay brokerage. Furthermore, it is expected that most retail investors are long-term investors, and they do not have to time the markets on a daily basis to buy units.

Mumbai-based mutual fund distributor, Rushab Desai, who prefers index funds to ETFs, says that ETF prices can actually fluctuate on a demand-supply basis and may trade at a premium to the actual price of the underlying index. can.

“Retail investors who do not understand the difference between the trade value and the actual price, can buy ETFs at a premium, which is absolutely unnecessary for them. Index funds are easy to track, do not require a demat account and are easily traded. On the other hand, we have seen strong participation of institutional investors in ETFs as these products are traded (which can help in taking advantage of intraday/short term market movements) and have low expense ratios, but if some AMCs have good retail participation If you want, then index funds are the way to go,” Desai said.