Exchange traded funds are ready for lift-off across emerging markets.
That’s the verdict of S&P Dow Jones Indices (SPDJI), which is considered a global leader in terms of providing benchmark indices for the financial markets. It is predicting that ETFs will enjoy particular success in the Indian market during the next five years.
According to Alka Banerjee, the managing director of product management at SPDJI, the story of ETFs in India is set to grow significantly in the coming years.
Speaking to Businessline
, she said: “In the next five years, I expect ETFs to be in a completely different space. The trajectory is only up.”
ETFs have had strong support from the government in India. For example, a significant amount of money has poured into ETFs via the Employees’ Provident Fund Organization (EPFO) – as such, it’s likely that the success of ETFs in the country will be more reliant on India’s domestic policies than any stand that is taken on foreign inflows. It is a domestic policy and Banerjee believes that equity investments are likely to continue.
In addition, there has been a serious education drive in the country, including webinars and SPDJI working closely with asset management firms in an effort to spread the word about how ETFs work and their potential. With the government playing its part, ETFs have grown from being almost non-existent in the country to suddenly having huge potential, albeit Banerjee believes it will still take retail to wake up and discover ETFs if they are to reach their goal.
Despite the positive climate for ETFs however, Banerjee is predicting a tough year for emerging markets overall as investors are expected to focus on safe havens.