Benchmark AMC might have dared to tread on the unbeaten path and establish itself as an ETF player, but is probably ahead of its time. Though Exchange Traded Funds (ETFs) are popular abroad, they still have to catch on in India. As a result, Benchmark Mutual Fund has remained a small entity.
The fund house offers eight funds, its most popular being Banking BeES. Banking as a sector was coveted by Foreign Institutional Investors (FIIs) but due to the ceiling on FII ownership they had to resort to the BeES fund as the alternative to playing the banking story. As the price of gold surged in the past two years, Gold Benchmark ETF has also gained in popularity.
As sector and thematic funds garner significant investor interest, the AMC is coming out with four global theme-based ETFs - Global Clean Fund, Global Private Equity Fund, Global Commodity Fund and Global Water Fund. All these funds (combined offer document with SEBI) would invest in ETFs linked to indices whose constituents are the companies which are linked to the respective businesses. For example, the Global Clean Fund is going to invest in ETFs linked to indices whose constituent companies are engaged in the production of clean or alternative energy or in companies which are engaged in manufacturing or technology development for clean energy.
Besides these products being rather unconventional, the Indian investor is not too conscious about the environment or related investment opportunities. The test will be in how many takers they can find for this unique venture.
They also plan to launch a S&P CNX 500 fund, a silver and an oil ETF in the near future. If ETFs gain in popularity and become more mainstream, this fund house will have a great start over all the rest.