Effectiveness of ETFs in Indexing: The Mean for Equity Investments by Employees’ Provident Funds in India

Sayan Banerjee

doi:7090254

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Effectiveness of ETFs in Indexing: The Mean for Equity Investments by Employees’ Provident Funds in India

Current Issue

Volume 3, 2015
Issue 5 (October)

Pages: 300-304 | Vol. 3, No. 5, October 2015 | Follow on

Paper in PDF Downloads: 60 Since Oct. 10, 2015 Views: 2503 Since Oct. 10, 2015

Authors

[1]

Sayan Banerjee, Goenka College of Commerce & Business Administration, Kolkata, India; Budge Budge Institute of Technology, Budge Budge, India.

Abstract

Purpose: This paper aims at finding the replication quality of Indian Exchange Traded Funds (ETFs) against the benchmark index and thus finding out the prudence of the decision to choose ETFs as the mean for getting equity exposure by EPFO in India. Methodology: Tracking Difference [TD] and Tracking Error [TE], two mostly followed metrics have been used to measure the performance of ETFs. Results: Very low level of tracking difference and tracking error exhibited by the ETFs under study. Findings: It is found that ETFs in India have been able to closely track the underlying index and are able to offset the negative effect of factors contributing to tracking difference.

Keywords

ETF, Indexing, NAV, Passive Management, Employees’ Provident Funds

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