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Benchmark Sets New Standards

A pioneer in the Indian mutual fund industry, Benchmark Mutual Fund plans to take ETFs to a global level

Benchmark Mutual Fund has been a pioneer of sorts in the Indian mutual funds industry. It was the first company to come up with exchange traded funds (ETFs) in India. Back in 2001, it launched Nifty BeES which invested only in S&P CNX Nifty stocks. After that it launched a slew of ETFs such as Nifty Junior, Banking, PSU Banking and Gold. Currently it has 10 ETFs functioning on the National Stock Exchange (NSE) with assets under management (AUM) of around Rs 2,900 crore.

The asset management company (AMC) is now planning to take ETFs to a new level. It has filed a combined offer document with the Securities and Exchange Board of India (SEBI) for four new global theme-based ETFs — Global Clean Fund, Global Private Equity Fund, Global Commodity Fund and Global Water Fund. All these funds would invest in ETFs linked to indices whose constituents are the companies which are linked to the respective businesses. For example, 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. Moreover, the fund house has decided to form a synthetic benchmark index composed of average net asset values (NAVs) of all the relevant ETFs.

While such products are unheard of in the Indian context, even from a global perspective they are rather unconventional. Though ETFs per se are popular abroad, in India they have not caught on as expected. To add to it, neither is the Indian investor too conscious about the environment nor related investment opportunities. The test will be in how many takers they can find for this unique venture.