Markets regulator Sebi is examining steps to improve liquidity in the exchange-traded funds segment on stock exchange platforms. Globally, passive funds such as index funds and exchange traded funds (ETFs) have emerged as one of the largest asset classes. Passive funds in India have tremendous scope to grow as the AUM under passive funds in India is still low as compared to its global peers,” the Securities and Exchange Board of India (Sebi) said in its annual report for 2020-21.
Passive funds are low cost products, well diversified in nature and perform in line with the market indices, providing an alternative to actively managed funds to retail investors.
According to the annual report, SEBI plans to examine measures for the development of passive funds covering various aspects such as increase in the liquidity for ETFs on the exchange platforms by efficient market making and better disclosures and transparency regarding such funds.
