Performance evaluation of exchange traded funds in India

Abstract

Exchanged Traded Funds is one of the investment alternatives which have been gaining increasing popularity in India. There are various types of ETFs which are traded on the stock exchanges, like equity index ETFs, liquid ETFs and the gold ETFs. ETFs are attractive investments because of their low costs, tax efficiency, and for various other features. Number of ETF is growing from 1 that is in December 2002 to 57 schemes in December 2015 and the average AUM has also been increased. In this paper, we evaluate the performance of Equity ETF, Bank ETF and Gold ETFs quoted at National Stock Exchange (NSE). 22 funds from these categories have been selected as a sample size. Traditional performance measures have been used to evaluate the performance of the selected ETFs. From the results, it is clear that, the ETFs outperform their underlying index, the Nifty 50, Nifty Next 50, Nifty Bank, Nifty Infrastructure, Nifty PSU Bank, Nifty 50 Shariah Index, and S & P BSE Sensex.