RETAIL RESEARCH

Corpus of Gold ETF (Rs cr) Vs. Prices of Gold (INR):

Snapshot:

Category / Scheme Corpus (Rs Crs)

(As of Dec 19)

Monthly Performance Return (%)

(As of Dec 19)

Total Volume in Dec 19 on NSE/BSE

(Rs Crs)

Change in volume over a month

(%)

Short Term Outlook

(0 to 3 months)

Long Term Outlook (3-12 months)

Gold ETFs Category 5,768 3.68 124 -15.6 Neutral Positive

Nippon India ETF Nifty BeES 1,673 1.11 118 -35.1 Neutral Neutral

SBI ETF Sensex 23,508 0.67 6.6 15.6 Neutral Neutral

Nippon India ETF Bank BeES 7,514 -0.37 90 -10.1 Negative Neutral

CPSE 10,460 -1.72 72 -65.8 Neutral Neutral

Bharat 22 ETF 8,136 1.11 18 -68.2 Neutral Neutral

The Month gone by:

Corpus: The corpus of the Gold ETF category rose by 4.1% during the month of Dec 2019 to Rs 5,768cr (vs Rs 5,540cr in Nov 2019). Huge net inflows and appreciation of the safe heaven on the back of global uncertainties, trade tensions and weak growth outlook kept its demand high leading to sharp rise in its AUM in CY2019. The corpus of Other ETFs category was up by 8.4% during the month of Dec 2019 to Rs 177,674cr (vs Rs 163,924 crore in Nov 2019). Strong inflows due to launch of Bharat Bond ETF supported the growth in AUM.

Fund flow: The overall ETF category witnessed net inflow of Rs 12,673.5cr over the course of the month. The Gold ETF category saw the modest inflow of Rs 26.85cr in Dec 2019, after seeing some profit booking in previous two months. Investors had been redeeming their investments in Gold ETF post Jan 2013; since then there were hardly any positive flow during a month. Last few months saw increasing participation of investors in Gold ETFs which can be seen from the rising turnover on the exchanges. Other ETF category saw net inflow of Rs 12,673.5cr on the back of launch of Bharat Bond ETF, a target maturity corporate ETF, launched in Dec 2019, mopped up Rs 12,000cr to support capex needs of PSUs.

Traded Volume: The total traded turnover in the Gold ETF category on NSE during Dec 2019 stood at Rs 124cr while the Other ETF Category witnessed a traded volumes of Rs 2,384cr. Gold ETFs which saw the high volumes in Aug and Sep 2019, saw subdued trading volumes in Dec 2019. Profit booking, flight towards safety and festive season might have triggered the high volumes. Among equity ETFs, highest volumes were seen in Nippon Indian ETF Nifty ETF (Rs 118cr) followed by Nippon India Banking ETF (Rs 90.4cr). CPSE ETF, Kotak Nifty ETF, ICICI Pru Nifty ETF, ICICI Pru Banking and Kotak Banking ETF also saw decent trading volumes.

Tracking Error: In Other ETFs category, the Tracking Error ranged from 0.02% to 1.60% (based on daily returns for the last 1 year period). Tracking Error for Nippon India ETF Nifty BeES, SBI Sensex ETF, Nippon India ETF Bank BeES and CPSE ETF was at 0.09%, 0.02%, 0.61% and 1.11% respectively. The Tracking Error of Gold ETF category was at 1.27%. (Source: NAVIndia).

Prices of Gold: Gold has been on an incredible bull-run throughout 2019, with the precious metal surging over 24% in CY2019 (in INR terms). The prices of the gold in USD terms shot up by 18.2% during CY19 from US$ 1,284.9 on Dec 31, 2018 to US$ 1,519 on Dec 31, 2019. The prices of gold in India were up by 3.06% m-o-m to Rs 39,205. Accommodative stance by major central banks, high liquidity, fears of global slowdown, yield inversions in the mid-part of the year, tensions between U.S. & China augured well for the safe haven metal.

Equity Markets: In the month of Dec 2019, the Sensex and Nifty-50 posted modest gains of 1.13% and 0.93% respectively.

RETAIL RESEARCH

16th Jan, 2020

ETF Review – Dec 2019

RETAIL RESEARCH

PSU –Thematic: CPSE & Bharat 22; Corporate Bond: Bharat Bond ETF

Net flows - Gold ETFs:

Net flows - Other ETFs:

Trend in the AUM:

The assets under management of the overall Exchange Traded Funds (comprising Gold, Equity and Liquid ETFs) rose by 8.25% MoM during Dec 2019 to Rs 183,442cr (vs Rs 169,464cr in Nov 2019).

The corpus of the Gold ETF category was up by 4.1% during the month of Dec 2019 to Rs 5,768cr (vs Rs 5,540cr in Nov 2019). Concerns of global economic slowdown, trade wars, political uncertainties and dovish statement of global central banks worked in favour of gold prices in CY19. Gold ETFs saw highest net inflows (since Dec 2012) of Rs 145.29cr in Aug 19. Prior to that investors at large have been pulling out of Gold ETFs for past several months as the gold prices saw range-bound movement for more than 3-4 years. Last two months also saw subdued inflows due to high redemption pressures.

Low and negative interest rates in global markets boosted the appeal of precious metals. International Gold Prices rose from US$ 1,466.1 on Nov 29, 2019 to US$ 1,519 on Dec 31, 2019. The prices of gold in India were up by 3.06% m-o-m to Rs 39,201. Easing tensions between U.S & China post signing of phase one trade deal, de-escalation of U.S. Iran conflicts would keep the upwards trajectory of gold limited. Concerns of looming recession risk, rising debt levels on the back of injection of liquidity in major economies and prolonged slowdown would support the bullion prices.

EPFO (Retirement Fund Body) have invested Rs 86,966cr in ETFs (Sensex and Nifty ETF, CPSE and Bharat 22 ETF) till Sep 2019. The EPFO has been investing in ETFs since August 2015. Its allocation to ETF increased from 5% of its incremental flows to 15% in 2018. The growth in the ETF AUM in the last three years was mainly supported by EPFO’s investment and lately divestment routes adopted by the Government.

Nifty & Sensex ETF together constitute ~65% of the total ETF AUM as of Dec 2019. Sector ETF mainly banking sector hold much of the AUM. FFOs/NFOs of CPSE ETF, Bharat 22 ETF and Bharat Bond ETF has driven 63% (YoY) AUM growth. Nifty based ETF has witnessed 56% (YoY) AUM growth as more AMCs launched Nifty 50 ETF during CY2019 and EPFO continued to invest. Factor based ETF (quality, value, low volatility) also saw some traction in this year

Trend in the Fund Flows:

The overall ETF category witnessed net inflow of Rs 12,700cr over the course of the month. The Gold ETF category saw net inflow of Rs 26.85cr and Other ETF category saw net inflow of Rs 12,673.5cr. In FY2019, the Gold ETF category witnessed net outflows of Rs 412cr, while in FY20, the category witnessed net inflow of Rs 123.8cr till Dec. After witnessing net outflows since FY16, rally in gold prices in 2019 after witnessing meagre rise in prices over past few years, resulted in increasing participation.

The Other ETFs category witnessed net inflows of Rs 12,678cr during the month. As seen from the chart alongside, NFO & FFO in CPSE, Bharat 22 ETF and now Bharat Bond ETF have led to spike in inflows in the fund offer month. The month after this fund offer has seen outflows in this category. Bharat Bond ETF garnered Rs 12,000cr from its issue in Dec. These funds would be utilised to capex and operational needs of PSUs.

Trend in the Folios in ETFs:

The Gold ETFs category saw a rise in folios during Dec 2019 of 29,147. During Apr-Dec 19, ~1.02lakh folio were added. HNI & Retail participation in Gold ETF increased in Sep 2019 quarter. The Other ETFs category witnessed a marginal rise in the number of folios up by 1.47lakh to 15.55 lakh in Dec 2019. The category saw decreasing participation from HNI investors & corporate investors in the Sep 2019 quarter. Open ended

RETAIL RESEARCH

Trend in investors’ folios:

Equity funds categories has seen constant rise in the number of folios. The total number of equity folios (Equity + ELSS) stood at 6.25cr while the overall folios of the MF industry stood at 8.71cr.

Addition / Deduction in number of folios:

Category Total no of folios as on

Dec 2019

Addition / Deduction in number of folios

In last quarter In last 1 year

Overall MF Folios 8.71cr +0.15cr +0.68cr

Equity Funds 6.25cr +0.07cr +0.13cr

Gold ETFs 4.23 lakh +0.64 lakh +0.96 lakh

Other ETFs 15.55 lakh +3.79 lakh +6.96 lakh

Trend in the trading volumes:

The total traded volumes in the Gold ETF category on NSE during Dec 2019 stood at Rs 124cr against the Rs 147cr seen in the month of Nov 2019.

Reliance Gold ETF, one of the most actively traded gold ETFs saw monthly turnover close to Rs 66cr during last month. This accounted for 53% of the overall category turnover during the month. This was followed by Kotak Gold ETF and SBI Gold ETF, which saw turnover of Rs 19.5cr and Rs 13.9cr respectively during Dec 2019.

The Other ETFs category witnessed total traded volumes stood at Rs 2,384cr during Dec. The Broader Equity Indices ETFs saw turnover of Rs 408cr last month. The highest volumes were seen in Nippon India ETF Nifty BeES, Kotak Nifty ETF and ICICI Pru Nifty ETF. Unlike earlier months, where much of the volumes of Nifty ETF was concentrated in Nippon India AMC, it seems that trading volumes have increased in other Nifty ETF also in the past two months. The same can be witness in Banking ETF which also has high investor participation. Bank ETFs saw volumes of Rs 261.5cr with almost the entire volumes coming through Nippon India ETF Bank BeES and Kotak Banking ETF. Few Private Banking ETF issues came up in the last quarter of 2019. Fixed income ETFs saw volumes of Rs 1,617cr out of that Rs 1,532cr were from Nippon India Liquid BeES constituting 94% of the total liquid ETF turnover.

CPSE ETF saw subdued trading volumes in Dec 2019. CPSE ETF, which functions like a mutual fund scheme, comprises scrips of 11 PSUs — NTPC, Coal India, IOC, ONGC, PFC, Bharat Electronics, Oil India, NBCC (India), NLC, SJVN. Bharat 22 ETF is collectively comprised of 22 stocks of Central Public Sector Enterprises (CPSE), Public Sector Banks and private companies which are Strategic Holding of Specified Undertaking of Unit Trust of India (SUUTI), also witnessed fall in its volumes. Volumes reduced in Dec due to its range-bound movement and in anticipation of disinvestment in these companies.

Factor based ETFs like Quality ETFs, Value and Low Volatility ETF usually have very low trading volumes. These ETFs are considered more from Investment prospective and not for riding short term triggers in the market.

Performance – Gold ETF:

Scheme Name Corpus (Rs crs) Expense Ratio (%)

Trailing Returns (%) Tracking Error

(Daily) 1 Month Absolute

3 Month Absolute

6 Month Absolute

1 Year CAGR 3 Year CAGR 5 Year CAGR

Aditya Birla SL Gold ETF 99 0.48 3.72 2.93 13.60 23.05 10.61 6.56 1.270

AXIS Gold ETF 138 0.50 3.71 2.85 13.96 23.40 9.96 6.09 1.260

HDFC Gold ETF 615 0.64 3.58 2.40 12.85 22.19 10.70 6.58 1.270

ICICI Pru Gold ETF 150 0.70 3.70 2.80 13.51 22.97 10.30 6.40 1.270

IDBI Gold ETF 68 0.35 3.65 2.65 13.46 23.03 11.08 6.94 1.260

Invesco India Gold ETF 37 0.45 3.75 2.89 13.67 23.21 10.66 6.60 1.270

Kotak GOLD ETF 509 0.55 3.72 2.61 13.55 23.05 10.59 6.55 1.270

Nippon India ETF Gold BeES 2,793 0.79 3.53 2.80 13.48 22.86 10.53 6.62 1.260

Quantum Gold Fund (G) 67 0.97 3.69 2.74 13.39 22.74 10.52 6.51 1.270

SBI ETF Gold 817 0.51 3.72 2.85 13.59 23.05 10.49 6.52 1.270

UTI-Gold ETF 474 1.18 3.69 2.51 13.39 22.85 10.74 6.67 1.270

RETAIL RESEARCH

Nippon India ETF Nifty BeES:

NAV is rebased to reflect unit split

Low correlation between the Corpus of ‘Nippon India ETF Nifty BeES’ and ‘Nifty Index’:

SBI ETF Sensex:

Nippon India ETF Nifty BeES: Reliance ETF Nifty BeES posted return of 0.94% during the month of Dec 2019 and the corresponding benchmark - Nifty 50 TRI clocked 0.94%. The net turnover of Reliance ETF Nifty BeES on NSE in Dec was at Rs 118cr.

ETFs are suited for conservative investors who want to follow and are willing to get returns in line with index returns. First time investors, who wish to enter into equity market, can consider opting for the index ETF route.

Investing through staggered investment mode like DIYSIP will further help them to accumulate cost averaging units over periods. However, Investors have to own a demat account and a broker’s account to participate in the investment process of ETF transaction.

The corpus of Reliance ETF Nifty BeES plunged by 19.28% to Rs 1,672cr during Dec 2019 (Rs 2,072cr in Nov 2019). Broad based indices, Nifty and Sensex touching their all-time highs in Dec might have triggered some profit booking in the ETF space. From the accompanying chart one can understand that the broader indices ETFs are considered as a trading / hedging tool by the investors to participate in the equity market. Sensex ETF and Nifty ETF are the best options for medium risk profile investors who want to get returns in line with the broader market returns.

SBI ETF Sensex: SBI ETF Sensex posted return of 1.11% during the month of Dec 2019 while the corresponding benchmark - Sensex TRI clocked 1.13%. The total turnover of SBI ETF Sensex on BSE in Dec was at Rs 6.6cr.

The investment objective of the scheme is to provide returns that, before expenses, closely correspond to the total returns of the securities as represented by the S&P BSE SENSEX by holding S&P BSE SENSEX stocks in same proportion. However, the performance of Scheme may differ from that of the underlying index due to tracking error.

Investing through staggered investment mode like DIYSIP will help first time investors to accumulate cost averaging units over periods. Active investors can also look for investment units when market corrects.

Rationale behind investing in Nifty & Sensex ETFs: Nifty & Sensex ETF gives a chance to

Participate in the most happening large cap stocks that will ride on growth in Indian economy,

Incur low cost in terms of expenses of scheme (compared to a diversified fund) or lower transaction costs (in the case of direct equity requiring frequent reshuffling),

Go in for SIP and take advantage of volatility in the markets to arrive at a lower entry level,

Avoid possibility of underperforming the benchmark,

Avoid the need of constantly monitoring and reviewing portfolio

RETAIL RESEARCH

Nippon ETF Bank BeES:

NAV is rebased to reflect unit split

Nippon India ETF Bank BeES:

Nippon ETF Bank BeES is an Exchange Traded Fund (ETF) listed on NSE and invests in stocks of Nifty Bank Index in the same proportion as the underlying Index. It provides an opportunity to investors for passively investing in a well-expanded portfolio of top banks as per free float market capitalization, as approximately represented by Nifty Bank Index.

NIFTY Bank Index is an index comprised of the most liquid and large capitalised Indian Banking stocks. The index has 12 stocks from the banking sector which trade on the NSE. The Index is computed using free float market capitalization method with base date of Jan 1, 2000 indexed to base value of 1000.

Reliance ETF Bank BeES posted 0.67% return during Dec. The total traded volume on NSE during the month was at Rs 90.4cr. Nifty Bank TRI index rose 0.67% in Dec 2019.

Reliance ETF Bank BeES may be a good choice for medium to high risk appetite investors who wish to invest in the banking sector of India. Investing through DIYSIP on every month will further enable investors to rupee cost average of their investments considering the high volatile nature in the domestic equity market. Rationale behind investing in Bank ETFs:

Slippages or fresh bad loan formation is expected to come down materially

The stressed corporate exposure as a percentage of total bank credit declined

Credit costs is expected to normalise over the next two years. This is likely to be driven by lower incremental slippages and recoveries from existing NPLs referred to IBC.

Factor Based ETF: Factor based ETFs are available and quite a few AMCs have ETFs for the same. Investing in such single factor based ETF can lead to higher accumulation of wealth over their respective parent ETF. Though the volumes would be lower in such ETF, an investor with moderate risk profile can consider placing his bets in such ETFs with a 3-5 year horizon. These single factor based funds score over active funds on risk adjusted returns (Sharpe ratio). Quality ETF, Value ETF & Low Volatility ETF are available for investors at large

The low volatility based ETF helps harness benefit of low volatility by helping investors during volatile markets and in process providing better risk-adjusted returns over a period of time. Stocks are selected taking into consideration volatility (i.e Standard Deviation). Low volatility factor is one of the few factors that have performed well during turbulent or bearish markets, providing capital protection when it is needed most

The value factor based ETF allows an investor take exposure to value stocks which may do well over a period of time. It reflect the behaviour and performance of a diversified portfolio of value companies. Stocks are selected based on parameters like Return on Capital Employed (ROCE), Price to Earnings (PE), Price to Book (PB) & Dividend Yield (DY). Nifty 50 Value 20 Index have yielded better returns than Nifty 50 Index, especially during bull phase of the market. It reflects the behaviour and performance of a diversified portfolio of value companies based on their fundamental attributes.

The Quality based ETF is created by assessing companies on fundamentals such as profitability, lower earnings-growth variability and lower leverage. Investment in quality factor is based on the underlying view that durable and stable businesses are expected to perform well in long term investment horizon

RETAIL RESEARCH

CPSE ETF:

Bharat 22 ETF:

CPSE ETF: CPSE ETF is an open ended, semi diversified, thematic and passively managed mutual fund ETF which tracks and provide returns corresponding to the CPSE Index, an index comprising of select heavyweight Central Public Sector Companies listed at National Stock Exchange of India Ltd (NSE). CPSE Index is constructed in order to facilitate Government of India’s initiative to disinvest some of its stake in selected CPSEs. The index has base date of 01-Jan-2009 and base value of 1000. Benefit of Investing in CPSE ETF:

Ability to participate in the long-term development of India, by purchasing stocks in Infrastructure and Natural Resources arena.

Provides small retail and HNI investors with the ability to diversify exposure across a number of Public Sector companies through a single instrument

Enables large investment in blue chip Public Sector enterprises without the constraint of market liquidity on the underlying individual stock.

High dividend yield companies and low P/E companies are the main reasons for such vast acceptance across all the investors. The total volume of the ETF stood at Rs 71.6cr during Dec on NSE. CPSE ETF posted negative returns of 0.37% in Dec 2019.

Bharat 22 ETF: Bharat 22 ETF posted return of -1.72% during the month of Dec. The net turnover of Bharat 22 ETF on NSE in Dec was at Rs 18cr. The Fund is a part of part of disinvestment program announced by the Department of Investment and Public Asset Management (DIPAM), Ministry of Finance. On Aug 04, 2017, the Hon’ble Union Finance Minister announced Bharat 22 ETF, thus fulfilling the promise made in the Budget speech of 2017. Bharat 22 ETF has been launched in line with the intent of the Government to use ETF as a vehicle for further disinvestment of shares. Accordingly, a new ETF with diversified CPSE stocks and other Government holdings had been launched in 2017-18. ICICI Prudential Mutual Fund managed Bharat-22 ETF’s, 1st tranche further fund offer on 14th Nov, 2017, had an initial issue size of over Rs 8,000 crore. The 2nd tranche further fund offer on 19th June, 2018 had received bids worth Rs. 15,436 crore, much higher than issue size of Rs. 6,000 crores. The 3rd & 4th tranche issue raised Rs 10,000cr and Rs 8,000cr in Feb and Oct 2019. Rationale behind investing in Bharat 22 ETFs:

Ability to participate in the long-term development of India, by purchasing stocks with strong fundamentals - 22 stocks from 6 sectors, viz. Industrials, Finance, FMCG, Utilities, Energy and Basic Materials.

The stocks in the Bharat 22 index are high dividend paying companies.

Provides small retail and HNI investors with the ability to diversify exposure across a number of Public Sector companies through a single instrument

Enables large investment in blue chip Public Sector enterprises without the constraint of market liquidity on the underlying individual stock. The government is a majority shareholder in the PSUs that form a part of the Bharat 22 Index.

RETAIL RESEARCH

Discount (+) / Premium (-) of Spot Price to NAV for last three months ending Dec 2019:

ETF name Category Avg Max Min

Aditya Birla SL Nifty ETF Equity: Large -0.03% 0.65% -0.76%

Aditya Birla SL Nifty Next 50 ETF Equity: Large 0.00% 1.17% -0.76%

Aditya Birla SL Sensex ETF Equity: Large 3.97% 11.11% -0.69%

AXIS Nifty ETF Equity: Large 0.06% 0.77% -0.80%

Edelweiss ETF - Nifty 100 Quality 30 Equity: Large 18.14% 21.94% 8.56%

Edelweiss ETF - Nifty 50 Equity: Large 17.51% 21.96% 11.30%

HDFC Nifty 50 ETF Equity: Large -0.05% 1.50% -0.61%

HDFC Sensex ETF Equity: Large 0.10% 1.37% -0.82%

ICICI Pru Nifty 100 ETF Equity: Large 0.03% 0.47% -0.54%

ICICI Pru Nifty ETF Equity: Large -0.04% 0.44% -0.32%

ICICI Pru Nifty Low Vol 30 ETF Equity: Large 0.21% 4.05% -0.40%

ICICI Pru Nifty Next 50 ETF Equity: Large 0.00% 0.48% -0.42%

ICICI Pru NV20 ETF Equity: Large 0.05% 0.41% -0.53%

ICICI Pru Sensex ETF Equity: Large -0.16% 0.53% -2.46%

IDFC Nifty ETF Equity: Large -2.25% 3.35% -6.01%

IDFC Sensex ETF Equity: Large -6.61% 0.53% -14.53%

Indiabulls Nifty50 Exchange Traded Fund Equity: Large -1.43% 5.56% -5.17%

Invesco India Nifty ETF Equity: Large 0.23% 4.83% -2.67%

Kotak Nifty ETF Equity: Large -0.18% 0.57% -0.59%

Kotak NV 20 ETF Equity: Large -0.01% 1.24% -1.00%

Kotak Sensex ETF Equity: Large -0.10% 1.13% -1.20%

LIC MF ETF NIFTY Equity: Large -0.32% 13.43% -2.65%

LIC MF ETF Nifty 100 Equity: Large 0.03% 2.10% -1.88%

LIC MF ETF Sensex Equity: Large 16.78% 21.61% 9.14%

Mirae Asset Nifty 50 ETF Equity: Large 0.00% 0.59% -0.44%

Motilal Oswal M50 ETF Equity: Large -0.01% 1.00% -2.24%

Nippon India ETF Junior BeES Equity: Large 0.04% 0.32% -0.33%

Nippon India ETF Nifty 100 Equity: Large -0.01% 1.17% -0.81%

Nippon India ETF Nifty BeES Equity: Large -0.04% 0.31% -0.27%

Nippon India ETF NV20 Equity: Large -0.15% 0.79% -1.17%

Nippon India ETF Sensex Equity: Large -0.04% 0.83% -1.30%

Nippon India ETF Sensex Next 50 Equity: Large 1.72% 9.50% -1.55%

Quantum Nifty ETF Equity: Large -0.22% 0.51% -0.92%

SBI BSE 100 ETF Equity: Large 0.15% 1.55% -0.58%

SBI ETF Nifty 50 Equity: Large 0.06% 1.04% -0.38%

SBI ETF Nifty Next 50 Equity: Large 0.24% 1.60% -0.48%

SBI ETF Quality Equity: Large 0.08% 0.58% -0.38%

SBI ETF SENSEX Equity: Large 0.08% 0.43% -0.71%

SBI ETF SENSEX Next 50 Equity: Large 0.01% 0.99% -0.68%

Tata Nifty Exchange Traded Fund Equity: Large 0.01% 1.13% -1.43%

UTI-Nifty ETF Equity: Large 0.14% 2.41% -2.40%

UTI-Nifty Next 50 ETF Equity: Large -0.60% 1.87% -4.06%

RETAIL RESEARCH

UTI-S&P BSE Sensex Next 50 ETF Equity: Large -1.70% 6.00% -7.02%

UTI-Sensex ETF Equity: Large 0.29% 2.54% -1.46%

ICICI Pru Midcap Select ETF Equity: Large & Mid 0.03% 0.53% -1.06%

Nippon India ETF Nifty Midcap 150 Equity: Large & Mid 0.11% 1.72% -0.82%

Motilal Oswal Midcap 100 ETF Equity: Mid 0.39% 1.58% -0.71%

ICICI Pru S&P BSE 500 ETF Equity: Multi 0.08% 2.05% -1.66%

Aditya Birla SL Banking ETF Equity: Sectoral-Banking 1.27% 10.16% -0.57%

Edelweiss ETF - Nifty Bank Equity: Sectoral-Banking 14.98% 21.27% 2.63%

ICICI Pru Bank ETF Equity: Sectoral-Banking 0.06% 0.48% -0.49%

Kotak Banking ETF Equity: Sectoral-Banking -0.05% 0.57% -0.60%

Kotak PSU Bank ETF Equity: Sectoral-PSU Banking 0.14% 1.54% -1.62%

SBI ETF Nifty Bank Equity: Sectoral-Banking -0.10% 0.31% -0.62%

Nippon India ETF Bank BeES Equity: Sectoral-Banking -0.05% 0.37% -1.73%

Nippon India ETF PSU Bank BeES Equity: Sectoral-PSU Banking 0.00% 0.63% -0.59%

ICICI Pru Private Banks ETF Equity: Sectoral-Pvt Banking 0.12% 2.59% -0.46%

Tata Nifty Private Bank ETF Equity: Sectoral-Pvt Banking -0.14% 0.92% -4.77%

Nippon India ETF Infra BeES Equity: Sectoral-Infra -0.20% 0.91% -4.13%

Nippon India ETF Consumption Equity: Sector-Consumption 0.04% 0.92% -0.64%

Nippon India ETF Dividend Opportunities Equity: Sector-Consumption -0.03% 0.99% -0.91%

Bharat 22 ETF Equity: Thematic-PSU -0.29% 0.02% -0.81%

CPSE ETF Equity: Thematic-PSU -0.16% 0.35% -0.34%

Motilal Oswal NASDAQ-100 ETF Equity: International 0.87% 1.63% -0.04%

Nippon India ETF Hang Seng BeES Equity: International 7.21% 15.61% -0.06%

LIC MF G-Sec Long Term ETF Debt: Gilt 4.14% 11.27% -1.68%

Nippon India ETF Long Term Gilt Debt: Gilt 0.15% 0.91% -0.29%

SBI ETF 10 Year Gilt Debt: Gilt with 10yr constant duration 0.41% 11.68% -3.95%

DSP Liquid ETF - Reinvest (Div-D) Debt: Liquid 0.00% 0.00% 0.00%

ICICI Pru Liquid ETF Debt: Liquid 0.00% 0.00% 0.00%

Nippon India ETF Liquid BeES Debt: Liquid 0.00% 0.00% 0.00%

What is Discount (+) / Premium (-) of Spot Price to NAV and how to read?

As ETFs are passively managed investments, the prices of gold ETFs must theoretically move in tandem with the price of physical gold. When the price of gold moves up, the value of ETFs appreciates and vice versa.

It is worth noting that like all traded instruments, the traded price of the ETF is influenced by demand and supply dynamics, and therefore is often different from the NAV of the ETF.

The NAV of the ETF reflects the end of day value of the units based on the holdings of the ETF reflecting the price of gold, after charging expenses for fund management.

Quite often, the traded prices of the ETF are quite different from the NAV due to low trades and other factors. In some cases, the traded price of the ETF may be lesser than the NAV of the ETF (discount of close price to the NAV). That means that a selling trade made on such a day will lead to losses for the investor.

When the traded price is more than the NAV (premium of Close price to the NAV), it means that the unit holder is getting a price for his units in excess of the actual value of investment.

So any buying on exchange will lead to loss to the investor. This can happen if the demand for units is very high. Usually a large difference in the price of the traded price and NAV corrects itself over time, offering an arbitrage opportunity by the market makers.

Even as Gold ETFs hold the promise of providing instant liquidity during trading hours, the poor trading volumes across some of the ETFs act as a deterrent to such liquidity.

Investors have to be careful on this, however one cannot notice such mispricing during the market hours as the NAV of the day is disclosed post market hours.

The above table lists out the average, minimum and maximum of the premium or discount of the spot price to their NAVs in the last three months.

RETAIL RESEARCH

Performance of Equity & Fixed Income ETFs:

Scheme Name Benchmark Category Corpus (Rs.

Crs)

Expense Ratio (%)

TER

Trailing Returns (%) Tracking Error

(Daily) (%) 1 Month Absolute

3 Months Absolute

6 Months Absolute

1 Year CAGR

3 Year CAGR

5 Year CAGR

Aditya Birla SL Nifty ETF Nifty 50 TRI Equity: Large 163 0.05 0.93 6.24 3.96 13.15 15.27 9.33 0.090

AXIS Nifty ETF Nifty 50 TRI Equity: Large 8 0.07 0.93 6.21 3.91 13.39 - - 0.090

Edelweiss ETF - Nifty 50 Nifty 50 TRI Equity: Large 2 0.07 0.95 6.25 4.04 13.63 16.05 - 0.090

HDFC Nifty 50 ETF Nifty 50 TRI Equity: Large 384 0.05 0.94 6.23 3.89 13.43 15.54 - 0.090

ICICI Pru Nifty ETF Nifty 50 TRI Equity: Large 1,379 0.05 0.94 6.24 3.93 13.46 15.48 9.32 0.090

IDFC Nifty ETF Nifty 50 TRI Equity: Large 1 0.17 0.91 6.08 3.80 13.13 15.37 - 0.090

Invesco India Nifty ETF Nifty 50 TRI Equity: Large 2 0.10 0.94 6.21 3.91 13.42 15.51 9.24 0.090

Kotak Nifty ETF Nifty 50 TRI Equity: Large 977 0.14 0.92 6.21 3.84 13.33 15.46 9.29 0.090

LIC MF ETF NIFTY Nifty 50 TRI Equity: Large 543 0.10 0.94 6.20 3.97 13.45 15.49 - 0.090

Mirae Asset Nifty 50 ETF Nifty 50 TRI Equity: Large 142 0.07 0.92 6.33 4.13 13.58 - - 0.090

Motilal Oswal M50 ETF Nifty 50 TRI Equity: Large 26 0.05 0.94 6.21 3.84 13.26 14.72 8.45 0.090

Nippon India ETF Nifty BeES Nifty 50 TRI Equity: Large 1,673 0.05 0.94 6.24 3.92 13.47 15.55 9.19 0.090

Quantum Nifty ETF Nifty 50 TRI Equity: Large 6 0.09 0.93 6.21 3.84 13.34 15.40 9.17 0.090

SBI ETF Nifty 50 Nifty 50 TRI Equity: Large 66,362 0.07 0.94 6.24 3.91 13.44 15.58 - 0.090

Tata Nifty Exchange Traded Fund Nifty 50 TRI Equity: Large 87 0.08 0.94 6.19 3.96 - - - 0.090

UTI-Nifty ETF Nifty 50 TRI Equity: Large 16,880 0.06 0.94 6.24 3.91 13.45 15.60 - 0.090

Aditya Birla SL Sensex ETF S&P BSE Sensex TRI Equity: Large 13 0.08 1.14 6.77 5.32 15.68 13.07 - 0.020

HDFC Sensex ETF S&P BSE Sensex TRI Equity: Large 49 0.05 1.10 6.76 5.24 15.59 17.05 - 0.020

ICICI Pru Sensex ETF S&P BSE Sensex TRI Equity: Large 32 0.08 1.13 6.77 5.24 15.52 16.85 9.68 0.020

IDFC Sensex ETF S&P BSE Sensex TRI Equity: Large 1 0.34 1.17 6.70 5.22 15.37 16.91 - 0.020

Kotak Sensex ETF S&P BSE Sensex TRI Equity: Large 14 0.28 1.09 6.71 5.10 15.30 16.78 9.56 0.020

LIC MF ETF Sensex S&P BSE Sensex TRI Equity: Large 416 0.10 1.18 6.80 5.26 15.61 17.09 - 0.020

Nippon India ETF Sensex S&P BSE Sensex TRI Equity: Large 23 0.07 1.10 6.75 5.23 15.55 16.99 9.79 0.020

SBI ETF SENSEX S&P BSE Sensex TRI Equity: Large 23,508 0.07 1.11 6.77 5.24 15.58 17.02 9.96 0.020

UTI-Sensex ETF S&P BSE Sensex TRI Equity: Large 6,388 0.06 1.12 6.79 5.25 15.62 17.07 - 0.020

Aditya Birla SL Nifty Next 50 ETF Nifty Next 50 TRI Equity: Large 69 0.05 -0.82 3.00 4.58 1.43 - - 0.520

ICICI Pru Nifty Next 50 ETF Nifty Next 50 TRI Equity: Large 44 0.15 -0.76 2.99 4.12 1.10 - - 0.520

Nippon India ETF Junior BeES Nifty Next 50 TRI Equity: Large 1,222 0.15 -0.83 3.07 4.29 1.35 10.89 9.38 0.520

SBI ETF Nifty Next 50 Nifty Next 50 TRI Equity: Large 428 0.15 -0.85 3.02 4.24 1.51 11.03 - 0.520

UTI-Nifty Next 50 ETF Nifty Next 50 TRI Equity: Large 374 0.14 -0.83 3.11 4.44 1.83 - - 0.520

Nippon India ETF Sensex Next 50 BSE Sensex Next 50 TRI Equity: Large 12 0.25 -0.98 1.85 - - - - 0.500

SBI ETF SENSEX Next 50 BSE Sensex Next 50 TRI Equity: Large 3 0.12 -0.96 1.90 -2.00 -3.18 - - 0.540

UTI-S&P BSE Sensex Next 50 ETF BSE Sensex Next 50 TRI Equity: Large 15 0.23 -0.96 1.89 -1.96 - - - 0.490

Nippon India ETF Shariah BeES Nifty 50 Shariah TRI Equity: Thematic 3 1.06 1.55 -0.73 0.91 4.39 10.22 7.18 0.660

ICICI Pru Nifty 100 ETF Nifty 100 TRI Equity: Large 10 0.46 0.67 5.71 3.83 11.43 14.47 9.11 0.130

LIC MF ETF Nifty 100 Nifty 100 TRI Equity: Large 340 0.25 0.69 5.71 3.80 11.45 14.74 - 0.130

Nippon India ETF Nifty 100 Nifty 100 TRI Equity: Large 7 0.97 0.62 5.56 3.46 10.80 13.89 8.49 0.130

SBI BSE 100 ETF S&P BSE 100 TRI Equity: Large 4 0.14 0.77 5.73 3.26 10.73 14.69 - 0.130

ICICI Pru NV20 ETF Nifty50 value 20 TRI Equity: Large 13 0.15 0.40 2.51 1.10 8.44 15.80 - 0.590

Kotak NV 20 ETF Nifty50 value 20 TRI Equity: Large 14 0.14 0.32 2.43 0.84 8.33 16.16 - 0.590

Nippon India ETF NV20 Nifty50 value 20 TRI Equity: Large 31 0.16 0.36 2.46 0.91 8.43 16.08 - 0.590

RETAIL RESEARCH

SBI ETF Quality Nifty 200 Quality 30 TRI Equity: Large 18 0.50 0.67 1.35 4.44 4.99 - - 0.460

Edelweiss ETF Nifty 100 Quality 30 Nifty 100 Quality 30 TRI Equity: Large 18 0.28 0.61 0.92 3.39 5.48 10.80 - 0.400

ICICI Pru Nifty Low Vol 30 ETF Nifty Low Volatility 30 TRI Equity: Large 88 0.42 0.25 1.06 2.57 4.87 - - 0.330

ICICI Pru Midcap Select ETF S&P BSE Mid-Cap TRI Equity: Large & Mid 40 0.45 -1.12 5.22 -0.65 -3.54 8.28 - 0.590

Nippon India ETF Nifty Midcap 150 Nifty Midcap 150 TRI Equity: Large & Mid 159 0.31 -0.01 6.72 -0.16 - - - 0.510

Motilal Oswal Midcap 100 ETF Nifty Free Float Midcap 100 TRI

Equity: Mid 32 0.20 -0.69 6.76 -2.28 -3.48 6.21 6.42 0.570

ICICI Pru S&P BSE 500 ETF S&P BSE 500 TRI Equity: Multi 61 0.29 0.62 5.83 3.07 8.83 - - 0.180

Aditya Birla SL Banking ETF Nifty Bank TRI Equity: Sectoral-Banking 141 0.17 0.65 - - - - - 0.520

Edelweiss ETF - Nifty Bank Nifty Bank TRI Equity: Sectoral-Banking 1 0.12 0.70 10.51 3.64 18.95 21.44 - 0.610

ICICI Pru Bank ETF Nifty Bank TRI Equity: Sectoral-Banking 638 0.16 0.68 10.50 - - - - 0.760

Kotak Banking ETF Nifty Bank TRI Equity: Sectoral-Banking 7,950 0.18 0.64 10.42 3.58 18.73 21.31 11.96 0.610

Nippon India ETF Bank BeES Nifty Bank TRI Equity: Sectoral-Banking 7,514 0.19 0.67 10.46 3.52 18.72 21.31 11.81 0.610

SBI ETF Nifty Bank Nifty Bank TRI Equity: Sectoral-Banking 4,589 0.20 0.68 10.49 3.55 18.78 21.31 - 0.610

ICICI Pru Private Banks ETF NIFTY Pvt Bank Index TRI Equity: Sectoral-Pvt Banking 731 0.16 0.70 9.26 - - - - 0.810

Tata Nifty Private Bank ETF NIFTY Pvt Bank Index TRI Equity: Sectoral-Pvt Banking 12 0.20 0.60 9.16 - - - - 0.840

Kotak PSU Bank ETF Nifty PSU Bank TRI Equity: Sectoral-PSU Banking 37 0.49 -5.67 9.68 -21.48 -19.10 -5.81 -9.92 1.560

Nippon India ETF PSU Bank BeES Nifty PSU Bank TRI Equity: Sectoral-PSU Banking 102 0.50 -5.50 9.85 -21.45 -18.83 -5.72 -9.88 1.560

Nippon India ETF Consumption Nifty Consumption TRI Equity: Sector-Consumption 13 0.13 -0.75 0.12 4.83 0.35 13.22 9.36 0.510

Nippon India ETF Dividend Oppor Nifty Dividend Opp 50 TRI Equity: Sector-Consumption 2 0.16 -0.09 -0.60 -3.85 0.57 9.34 6.16 0.470

Nippon India ETF Infra BeES Nifty Infrastructure TRI Equity: Sectoral-Infra 13 1.10 -2.12 1.23 -3.10 3.10 6.84 1.88 0.680

CPSE ETF Nifty CPSE TRI Equity: Thematic-PSU 10,460 0.01 -0.36 -1.41 -17.54 -3.88 -2.41 -1.32 1.110

Bharat 22 ETF S&P BSE Bharat 22 TRI Equity: Thematic-PSU 8,136 0.01 -1.72 -1.71 -11.99 -3.81 - - 0.640

Motilal Oswal NASDAQ-100 ETF NASDAQ - 100 TRI Equity: International 338 0.54 2.74 14.68 17.59 41.63 22.23 17.52 1.330

Nippon India ETF Hang Seng BeES Hang Seng Index Equity: International 13 1.13 6.72 9.35 3.26 14.60 12.75 8.57 1.200

LIC MF G-Sec Long Term ETF Nifty 8-13 Yr G-Sec Index Debt: Gilt 90 0.26 -0.09 1.35 3.73 10.36 6.05 8.03 0.930

Nippon India ETF Long Term Gilt Nifty 8-13 Yr G-Sec Index Debt: Gilt 7 0.04 -0.08 1.40 4.22 11.09 6.40 - 0.930

SBI ETF 10 Year Gilt Nifty 10 yr G-Sec Index Debt: Gilt 10yr const duration 1 0.14 -0.11 1.19 4.46 9.74 5.27 - 0.930

DSP Liquid ETF - Reinvest (Div-D) Nifty 1D Rate Index Debt: Liquid 77 0.59 1.41 2.01 3.43 9.60 - - 0.900

ICICI Pru Liquid ETF S&P BSE Liquid Rate Index Debt: Liquid 78 0.50 0.34 0.95 1.96 5.02 - - 0.880

Nippon India ETF Liquid BeES Nifty 1D Rate Index Debt: Liquid 2,250 0.65 0.00 0.00 0.00 0.07 0.04 2.38 0.870 Note: Corpus and Returns as on 31st Dec 2019. State of the Exchange Traded Funds - Globally: 1. Assets under management in ETFs (and ETPs) globally have risen above $6 trillion as of the end of November 2019. Total AUM rose 2.5% during the month, from $5.96tn to $6.12tn, driven by a

combination of strong net inflows and healthy market performance. November’s bullish equity market sentiment, especially in the US, also helped to achieve the landmark. Robust net inflows and upwards-trending stock markets have also helped ETFs experience outsized AUM growth over the whole year – AUM across the industry is up 27% YTD which is significantly greater than the 20.1% compound annual growth rate over the past ten years.

2. The industry attracted net inflows of $75.3 billion in November, the fourth-highest monthly net inflow on record. Equity ETFs accounted for the majority of net inflows with $56.9bn, followed by fixed income with $16.4bn, while commodity ETFs suffered $1.7bn in net outflows. Robust demand during the month has increased year-to-date (YTD) net inflows to $477.0bn which is higher than the $439.6bn gathered at this point last year.

3. During November the S&P 500 gained 3.6% as global markets were resistant to fears of inflation and showed optimism on the trade talks. Global equities as measured by the S&P Global BMI were up 2.5% and the S&P Emerging BMI gained 0.1%

4. Assets invested in ETFs listed in the US reached a new record high of $4.28tn at the end of November following net inflows of $50.9bn during the month. YTD net inflows stand at $274.0bn which is the second-highest on record. The US currently has 2,346 ETFs/ETPs, from 151 providers on three exchanges.

(Source for these data: etfgi.com, etf.com)

RETAIL RESEARCH

ETF Reckoner for period Jan–Mar 2020:

Exchange Traded Funds

Scheme Name & ISIN Close Price (Rs) NAV (Rs)

Fund Size (Rs in crs)

Expense Ratio % (TER)

6 Months Return

Absolute

1 Year Return CAGR

3 Year Return CAGR

Tracking Error

Daily Avg Turnover (Rs)

Average Discount/ Premium (%)

Global ETFs

Motilal Oswal NASDAQ-100 ETF INF247L01031

616.29 606.67 338 0.54 17.59 41.63 22.23 1.329 99,77,650 0.83%

Gold ETFs

HDFC Gold ETF INF179K01CN1

3,518.30 3,542.39 615 0.64 12.85 22.19 10.70 1.268 59,83,725 -0.15%

SBI ETF Gold INF200K01099

3,511.95 3,547.12 817 0.51 13.59 23.05 10.49 1.268 66,05,822 -0.41%

Nippon India ETF Gold BeES INF204KB17I5

34.45 34.68 2,793 0.79 13.48 22.86 10.53 1.260 3,13,92,370 -0.22%

Nifty ETFs

Nippon India ETF Nifty BeES INF204KB14I2

129.15 128.94 1,673 0.05 3.92 13.47 15.55 0.092 5,62,70,541 0.01%

ICICI Pru Nifty ETF INF109K012R6

128.77 128.21 1,379 0.05 3.93 13.46 15.48 0.092 2,54,61,309 -0.03%

SBI ETF Nifty 50 INF200KA1FS1

125.81 125.29 66,362 0.07 3.91 13.44 15.58 0.092 1,85,65,269 0.10%

Sensex ETFs

UTI-Sensex ETF INF789FB1X58

442.62 434.80 6,388 0.06 5.25 15.62 17.07 0.017 25,23,352 0.37%

SBI ETF SENSEX INF200K01VT2

439.41 437.52 23,508 0.07 5.24 15.58 17.02 0.017 31,40,219 0.16%

Bank/PSU Bank ETFs

SBI ETF Nifty Bank INF200KA1580

325.94 325.29 4,589 0.20 3.55 18.78 21.31 0.615 3,39,26,922 -0.01%

Kotak Banking ETF INF174K01F59

331.08 329.70 7,950 0.18 3.58 18.73 21.31 0.614 1,59,70,517 0.06%

Nippon India ETF PSU Bank BeES INF204KB16I7

27.84 27.76 102 0.50 -21.45 -18.83 -5.72 1.561 16,43,319 0.02%

Other ETFs

Nippon India ETF Junior BeES INF732E01045

293.75 293.75 1,222 0.15 4.29 1.35 10.89 0.519 1,43,56,388 0.12%

LIC MF ETF Nifty 100 INF767K01PC8

127.36 127.45 340 0.25 3.80 11.45 14.74 0.128 20,671 0.54%

Motilal Oswal Midcap 100 ETF INF247L01023

18.00 17.87 32 0.20 -2.28 -3.48 6.21 0.572 11,38,192 0.56%

Nippon India ETF Shariah BeES INF732E01128

255.58 255.93 3 1.06 0.91 4.39 10.22 0.655 60,474 0.03%

Factor based ETFs

ICICI Pru Nifty Low Vol 30 ETF INF109KB10T8

92.05 91.75 88 0.42 2.57 4.87 - 0.329 12,88,436 0.18%

Nippon India ETF NV20 INF204KB18I3

58.50 58.36 31 0.16 0.91 8.43 16.08 0.590 12,27,399 -0.17%

RETAIL RESEARCH

Note:

NAV value, Closing price and Trailing Returns are as on Dec 31, 2019 wherever available. Corpus values are as on Dec 2019.

Tracking error is the difference between a portfolio's returns and the benchmark index for past 1 year. Expense ratio% (TER) is for Dec 2019

Discount and Premium is calculated as the difference between NAV and the closing price on a particular date. If the close price is less than the NAV, then it is at discount and vice versa. We have taken the daily average discount/premiums for the above schemes over the last one month. Daily average turnover for the above schemes are for the last one month.

Schemes shortlisted on the basis of 6m. 1y and 3y Trailing Returns giving appropriate weights, volumes, average daily turnover, tracking error as compared to the category and discount/premium as compared to the category.

The source of the above data is NAVIndia Software

ETF Basics:

What are ETFs? Exchange Traded Fund (ETF) are mutual funds that trade like stocks. Like a stock, ETF units are traded on exchanges on which it is listed at market determined prices and are bought and sold at any moment during market hours through demat accounts. The most common ETFs are designed to track the performance of a market benchmark or Index’s total return. Benefits of ETFs: Diversification: Fund holds a basket of securities corresponding to the underlying index. Lower cost: ETFs generally offer lower expense ratios than active/conventional mutual funds schemes. Lower investment: You can buy an ETF for as low as the cost of one unit, gives you the opportunity to start investing in a diversified portfolio with less money. Passive management: You don't have to keep track of every single investment your ETF owns. The fund manager ensures that the portfolio resembles the benchmark index with minimal tracking error. Tax Efficiency: Equity ETFs are treated as Equity oriented funds for the purpose of taxation. Trading flexibility: ETFs offer you the same intraday pricing you get when trading stocks through a broker. ++ What’s the difference between Active Funds and ETFs? Goal: Active funds aim to outperform the benchmark, ETFs track the performance of the benchmark; Strategy: Active funds construct a portfolio to generate alpha through research & analysis, ETFs mimic the benchmark portfolio; Risks: Active funds additional risk to generate Alpha, ETFs do not need to take any additional risks as they track the benchmark’s return. Why should you consider having ETFs in your portfolio? Liquidity: Investments in ETFs can form a portion of an overall portfolio in a manner to ensure liquidity across the portfolio. Balanced Portfolio: Owning a basket of securities in a well-diversified manner is often costly. ETF`s give investors the option to invest in a basket of securities at a fraction of the cost of an underlying basket. As a broad index ETF baskets consist of multiple stocks in a pre-determined weight calculated periodically, the ETF unit holder can hold a balanced portfolio through a single instrument. Cost Efficiency: Buying several securities involves a variety of costs like brokerage and taxes. An ETF transaction is a single purchase that gives you access to all the securities within a given basket based on the individual stock weightage. Risk Management: Owning a broad based ETF gives access to a diversified portfolio thus reducing concentration risks on a sector specific and stock specific basis.

RETAIL RESEARCH

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