ETF AUM: 300% jump in 6 months; Indians go passive globally

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Indians are going passive in the global market. A recent report by a fintech platform Winvesta shows it has witnessed a 325% jump in asset under management (AUM) in exchange traded funds (ETFs) in the last six months. By comparison, the AUM in stocks grew by over 185% during the same period.

“Despite the sharp rise in interest from traders and younger investors due to the meme stock phenomenon in the US. Besides, FAANG (Facebook, Amazon, Apple, Netflix and Google) stocks, popular among retail investors, made up only 17% of the total stock investments on its platform. This ratio trended downwards since the beginning of last year, but has remained constant in Q2,” the report noted.

ETFs hold about 13% share in overall asset under management (AUM) on Winvesta. The share was just 9% six months ago.

“ETF investing remains more popular among matured investors, but younger investors are also evincing interest. Around 65% of the ETF AUM on the platform is held by investors in the 35+ age group. Younger investors are more comfortable picking single stocks,” the report noted.

Trends

The most popular ETFs in terms of AUM include TQQQ (ProShares UltraPro QQQ) ETF, ARKK (ARK Innovation), ARKG (ARK Genomic Revolution), FNGU (Bank of Montreal MicroSectors FANG Index 3X Leveraged), and VTI (Vanguard Total Stock Market Index). Interestingly, The S&P 500 ETFs (VOO, SPY) ranked much lower in popularity.

Dubbing the trend as welcome, Gaurav Rastogi, CEO, Kuvera Wealth, specified reasons for choosing ETFs over stocks, especially in the global market.

“Sending money abroad is not easy or cheap even under the LRS (liberalised remittance scheme). The process becomes simpler in ETFs. Selecting stocks in India is hard as is, doing it for international markets is harder still. Most investors prefer international index funds or a fund manager to do this for them. Once sold, bringing money back into India is still not smooth, while selling and international fund is simple,” he added.

Among other popular ETFs, actively managed ARK fund ETFs recorded the highest amount of transaction volumes.

The global semiconductor shortage also attracted investments in the iShares Semiconductor ETF (SOXX) which is now the seventh most popular on the platform by AUM.

Returns

“SOXX ETF has given returns of 20.3% year-to-date, and is up almost 70% in the last one year,” the report said.

Clean energy ETFs also maintained their popularity. QCLN (First Trust NASDAQ Clean Edge Green Energy ETF), and LIT (Global X Lithium & Battery Tech ETF) were both in the top 10 ETFs by AUM.

The Winvesta report further said the average account size on the platform has grown from just about $2000 in the middle of last year, to around $4700 today.