HDFC MF, the country’s most profitable mutual fund and third largest in terms of assets under management filed for nine exchange traded funds (ETFs) with the regulator.
These schemes for which the fund house filed for approval are HDFC Nifty 100 ETF, Nifty Next 50 ETF, NV20 ETF, Nifty Private Bank ETF, Nifty 100 Low Volatility 30 ETF, Nifty 100 Quality 30 ETF, Nifty 200 Momentum 30 ETF, Nifty Growth Sectors 15 ETF and Nifty IT ETF.
Earlier this year, HDFC MF had launched two other passive funds—an international offering called Developed World Indexes Fund of Funds and Nifty Equal Weight Fifty fund.
Passive funds are low cost funds that replicate the index, while active funds give flexibility to the fund manager to choose the stocks. Fund houses charge a higher fee for active funds, which subsequently increases their margins.
However over the last few years, active managers have found the going tough, with fund managers finding it tough to beat their benchmarks.
As per S&P Indices Versus Active (SPIVA) India Scorecard for the one-year period ending June 2021, 86.2% of Indian Equity Large Cap funds, 57.1% of Indian Equity Mid- /Small-cap and 53.7% of the ELSS funds underperformed their respective benchmarks.
Over longer horizons, the majority of the actively managed funds in India underperformed their respective benchmarks. Over a 5-year period ending in June 2021, 82.7%, 76.2% and 69.6% of the Indian Equity Large-cap, ELSS and Mid/SmallCap funds underperformed their respective benchmarks, while for a 10 year period it reduced to 65.93, 48.57 and 40.3% respectively.
Recently, Sachin Bansal backed Navi Mutual Fund has filed for 10 passive funds which include the likes of Navi Total US Stock Market Fund of Fund, Navi Nifty 100 ESG Index Fund and Navi Nifty Commodities Index Fund.