ETFs back in demand

With the strong performance by benchmark indices, investors are increasingly opting for ETFs

With the strong performance by benchmark indices, investors are increasingly opting for passive investment options or exchange-traded funds (ETFs). These low-cost investment vehicles mimic an underlying index like the Sensex or Bank Nifty. So far this year, ETFs tracking Indian indices have witnessed highest inflows in emerging markets, followed by Brazil and Colombia, while China saw outflows. 

The general flows into ETFs have been strong on account of a secular uptrend in the markets, with Nifty gains of 17 per cent and Bank Nifty’s 29 per cent. Increasing flows from the Employees’ Provident Fund Organisation and launch of a new