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ABSTRACT
This paper evaluates the performance of selected Exchange Traded Funds (ETFs) tracking "NSE NIFTY" AND "BSE SENSEX" indices. We compare the performance of ETFs with the help of average return, standard deviation and regression analysis. Trading Prices of ETFs and their Benchmark Indices had been collected for a period of two years extending from 01/04/2013 to 31/3/2015. ETFs need to track the performance of their benchmark index / asset, since they are passive investment avenues. We observe from this study that "NSE NIFTY" ETFs track their benchmark index and perform near to their benchmarks performance when compare to "BSE SENSEX" ETFs performance, it is also observed that "Goldman Sachs NIFTY ETF" tracking "NSE NIFTY" is performing good when compared to the other three ETFs included in this study.
KEYWORDS: NSE NIFTY, BSE SENSEX, Exchange Traded Funds (ETFs), "Goldman Sachs NIFTY ETF"
INTRODUCTION
ETFs are mutual fund schemes that are listed and traded like a stocks on the exchange. An ETF is a hybrid financial product, bearing the twin features of a stock and a mutual fund. Like a stock it can be traded on a stock exchange, and like a mutual fund it behaves like a diversified portfolio. ETFs are passive investment products they invest in exactly the same securities, and in the same proportions, as a market index such as "NSE NIFTY" or "BSE SENSEX". It is called passive because portfolio managers don't make decisions about which securities to buy and sell; the managers merely follow the same methodology of constructing a portfolio as the market index. The managers' goal is to replicate the performance of an index as closely as possible. In this study we evaluate the performance of Equity ETFs traded in India. This study covers ETFs from major two stock exchanges in India "NSE" & "BSE", covering the two most popular stock market indices "NIFTY" & "SENSEX" as benchmarks. "SBI SENSEX ETF" is an exchange traded fund that has a passive investment strategy. The investments objective of the scheme is to provide returns that, before expenses, closely correspond to the total returns of the securities as represented by "BSE SENSEX" by holding "BSE SENSEX" stocks in same proportion. "KOTAK SENSEX ETF" is an open-ended exchange traded fund. The...