PRESENTATION ON ETF

8/7/2019 PRESENTATION ON ETF

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PRESENTATION ON ETF

PRESESENTED BY:-

Anand Soni

Dhananjay Kumar

Shikha Khare

PRESENTED TO:-

Prof. Pushkal Pandey

Date:- 8-September-2010


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Exchange traded fund, are investment companies thatare legally classified as open ended companies or unit

investment trusts.

Similar to index fund.

ETFs always sold in the form of creation unit. Purchase with a basket of securities that generally

mirrors the ETFs Portfolio.

Then splits it up and sells the individual shares on a

secondary market.

Objective of ETF is to achieve the same return as a

particular market index.

WHAT IS ETF


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ORIGIN OF ETF

1989 ETFs had their genesis with Index participation shares, an

S&P 500 proxy that traded on the American stock exchange.

1990 Started trading on the Torronto stock exchange.

1993 First ETF SPDR launched, designed to compete with futures

listed on American Stock exchange.

Subsequent ETFs-1995 Midcap Spider

1996 WEBs(World equity Basket)

1998 Diamond and select sector spider

1999 QQQs(cubes)

Popular ETFs

QQQs (Cubes) based on the Nasdaq-100 Index,

SPDRs (Spiders) based on the S&P 500 Index,

iSHARES based on MSCI Indices and

TRAHK (Tracks) based on the Hang Seng Index.


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Individual

Individual Corporate

Corporate Institution

Institution

USERS OF ETF


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ADVANTAGES

MINIMUM

INVESTMENT

Liquidity

Lowtransaction

cost

GLOBAL

EXPOSURE

CONVENIENCE

TRANSPARENCY

SHORTSELLING

DIVERSIFICATION


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Functionality ETFs Stocks Mutual Fund Unit

Real time trading and pricing

throughout market hours

Yes Yes No

Subscription fees No NO YES

Management fees NO NO YES

Short selling Yes Yes No

Can be purchased through NSE

broker and/or online trading a/c

Yes Yes No

Can be traded real time on NSE Yes Yes No

Is arbitrage process possible

between future and cash market

Yes Yes No

Is diversification possible with a

single unit

Yes No Yes

Active management NO NO YES

Market making Yes No No

Intra day trading Yes Yes No

Paper less investing Yes Yes No

Can pay dividend Yes Yes Yes

Exit load No No Yes


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GLOBAL ETFs

TYPES OF ETF

COMMODITIES FIXEDINCOME

RULE BASEDINDICES CURRENCY

GOLD

OIL

COMMODITY

INDEX

GOVERNMENT

CORPORATE

FUNDAMENTAL

WEIGHTED

BASED ON THEQUANT MODEL

DIVIDEND

YIELD


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ALTERNATIVE ASSETS COMPARISION

Asset Class Return

Potential

Liquidity Diversification

Benefits

Risk

Involved

Holding

Cost

Gold Low High Very high Low Low

Private equity Very High Low Moderate Very high High

Hedge funds Various Low Various Various High

Commodities Volatile High High High Low

Arts &

collectibles

Medium Very low High High High


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ETFs IN INDIA

Nifty BeES First ETF in india, listed on NSE.

Bank BeES Tracks the CNX Nifty Junior Index.

Junior Nifty BeES - Tracks the CNX Nifty Junior Index.

Liquid BeES First liquid exchange traded fund in the

world, listed and traded on the Capital market segment.

UTI Sundar Date of inception is 7thjuly 2003, listed on

NSE.

Spice - Date of inception is 10th January 2003, listed on

BSE.

http://www.nseindia.com/content/products/prod_etfs7.htm


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CREATION PROCESS OF ETF

ETF

MANAGER/SPONCER

SECURITIES &

EXCHANGE

COMMISION

PLAN APPLY

PLAN APPROVED

AUTHORIZEDPARTICIPANT TRUST

AGREEMENT

CREATION UNIT

ISSUE ETF SHARE

OPEN MARKETBUY/SELL


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REDEMPTION PROCESS OF ETF

AUTHORIZED

PARTICIPANT

SELL IN OPEN

MARKET

HOARD ENOUGH ETF

SHARE & FORM A

CREATION UNIT

CREATION UNIT IS

NO MORE &

SECURITIES

HANDED OVER TOTHE REDEEMER


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MARKET RISKCURRENCY

RISK

DEVIATIONFROM NET

ASSET VALUE

LIQUIDITYRISK

RISK


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GROWTH OF ETF


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APPLICATION OF ETFS

Efficient trading

Equitizing cash

Managing cash flows

Diversifying Exposure

Filling Gaps

Shorting or hedging

http://www.nseindia.com/content/products/prod_etfs3.htm


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CONCLUSION

What attracts investors to ETFs?

The diversification of an index fund with the trading flexibility

of a stock

an exchange listing

ability to trade continuously

tradable and diversifiable

Transparent

Low expense ratios economical to buy and maintain, especially over the

long-run

Tax efficient.


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PRESENTATION ON ETF

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