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Funds Eye International ETFs

Some funds have filed ETFs want to drive gains from Hang Seng and MSCI

Exchange Traded Funds (ETFs) are fast becoming the favorites of fund houses. The fact that they hold the distinction of being the only mutual fund asset class which received inflows last year, helps make the decision easier. But, fund houses are looking to go much further than that, they are eyeing gains at the international level.

Increasingly, mutual fund houses are eying launches of ETFs with global indices underlying, according to a Business Standard report. For instance, Benchmark MF has filed for an ETF based on Hong Kong’s Hang Sang Index, while Reliance MF has filed for approval of an ETF based on the MSCI India Index.

Aside from looking to participate in the market gains on the global stage, the other ostensible reason that is making funds eye launch of ETFs is that they offer the very tangible benefit of being very low-cost – investing in ETFs costs just 0.5 per cent of the investment. As such, funds can promise low-costs and good returns to investors, thereby making for a invaluable mesh.

The investment objective of the Benchmark scheme states that it would offer returns that closely correspond to the total returns of securities in the Hang Sang index. The units of the scheme would be listed on the National Stock Exchange (NSE) and investors would have the freedom to buy or sell units at their own will like any other mutual fund.

Benchmark has also filed for an Infrastructure ETF which will track the CNX Infrastructure index.

Reliance Mutual Fund MSCI India Index ETF plans to mirror that index’s returns. Stocks posted on MSCI India Index are heavyweights like Reliance Industries, Infosys, ICICI Bank, L&T, ONGC, BHEL, Sterlite Industries and Wipro, to name a few.