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Time of India
3 days ago
- Business
- Time of India
The rise of ETFs in India: Why Gen Z is saying no to fees
India's financial landscape is undergoing a remarkable transformation, propelled by a new wave of investors reshaping how wealth is built and managed. At the forefront of this change is Generation Z—digital natives born into a connected world—whose investment preferences are clear: they value transparency , flexibility, and cost-efficiency. As a result, Exchange-Traded Funds ( ETFs ) have emerged as the preferred investment vehicle for young Indians, marking a decisive shift away from traditional, fee-heavy models. Gen Z's investment ethos: Value, transparency, and control India's economic optimism is tangible, with projected GDP growth of 6-7% annually, on the heels of a record number of IPOs in FY2024-25. The country's increasing presence in global equity indices further highlights its rising influence on the world stage. Against this backdrop, Gen Z investors are making their mark—digitally savvy, financially informed, and deeply conscious of the value they receive for every rupee invested. Best MF to invest Looking for the best mutual funds to invest? Here are our recommendations. View Details » by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Play War Thunder now for free War Thunder Play Now Undo ETFs align perfectly with this ethos. While traditional mutual funds have been popular for decades, they often come with management fees and hidden charges that can quietly chip away at returns. Conversely, ETFs offer a low-cost , passive investment approach, with expense ratios significantly lower than those of actively managed funds. Over the long term, this cost advantage can lead to substantially higher net returns—especially for young investors with extended investment horizons. Transparency and liquidity are equally vital to Gen Z. Traded on stock exchanges, ETFs provide real-time pricing and the flexibility to buy or sell during market hours. This level of control and visibility resonates with a generation accustomed to instant access and seamless digital experiences. Additionally, ETFs offer built-in diversification, allowing investors to gain exposure to a broad basket of stocks or bonds through a single instrument—simplifying portfolio management and risk mitigation. Live Events The digital dividend and global trends India's digital revolution has democratized access to financial markets. Widespread smartphone usage, the rise of fintech platforms, and supportive regulations for digital onboarding have made investing more accessible than ever. Raised in an environment of apps and algorithms, Gen Z naturally gravitates toward investment products that are easy to understand, access, and manage. Globally, the popularity of ETFs is on the rise. India's share in major emerging market ETFs has grown significantly—now accounting for over 20% of the Vanguard FTSE Emerging Markets ETF (VWO), double its share from five years ago. This shift reflects increasing international confidence in India's economic prospects and the sophistication of Indian investors aligning their portfolios with global best practices. For Gen Z, avoiding high fees is about more than saving money; it's about maximizing value and ensuring their investments work as hard as they do. In an era of abundant information and diverse options, paying high management fees for average performance is no longer acceptable. ETFs, with their low-cost structure, empower investors to retain more of their returns and compound wealth more effectively over time. Over the past decade, ETFs as a category have delivered robust returns, often closely tracking the performance of the broader equity markets they represent. For example, global equity ETFs have historically mirrored the long-term gains of major stock indices, with average annualized returns in the range of 7-10% over extended periods, depending on the market and asset class. Analysis of ETF portfolios from 2007 to 2024 shows that ETFs posted positive returns in roughly two-thirds of all months, demonstrating both resilience and the potential for steady wealth accumulation over time. While individual ETF performance varies, the overall track record underscores why so many investors—especially the younger generation—are gravitating toward these low-cost, diversified vehicles for long-term growth. Challenges and the road ahead While the ETF revolution is promising, challenges remain. India's complex capital gains tax regime—such as the 12.5% annual tax on unrealized gains—can impact net returns. Investors must understand these nuances and seek professional advice when necessary. Nonetheless, the overall trajectory is clear: ETFs are poised to become central to India's wealth creation story. This shift signifies more than a trend; it marks a paradigm change in how Indians, especially the young, approach investing. As India's economy continues to grow and markets mature, ETFs will play an increasingly vital role. For Gen Z, the message is straightforward: invest smartly, keep costs low, and harness technology to build a secure financial future. At HDFC Securities, we are dedicated to equipping this new generation of investors with the tools, knowledge, and platforms they need to succeed. The future of investing in India is bright, and ETFs are leading the way. (The author, Dhiraj Relli is the MD & CEO at HDFC Securities) ( Disclaimer : Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times)
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Business Standard
05-05-2025
- Business
- Business Standard
Silver ETFs outshine gold with 3.3x growth in volume: What you should know
This year's Akshay Tritiya saw an impressive surge in demand for Gold and Silver ETFs, with the combined industry volume increasing by nearly 3 times compared to last year. The total volume jumped from Rs 224 crore in 2024 to Rs 644 crore in 2025, marking an astounding growth of 2.9x, as per NSE data. This surge highlights the growing popularity of Exchange-Traded Funds (ETFs) as an attractive investment avenue during the festive season. Gold ETFs: Strong Growth, But Silver Outshines Gold ETFs witnessed a significant rise in volume, growing from Rs 130 crore to Rs 331 crore in the last one year as of 30 April 2025, which represents a 2.5x increase. However, Silver ETFs saw an even more remarkable jump, with volumes soaring from Rs 95 crore to Rs 313 crore, a massive 3.3x growth compared to last year. This made Silver the standout performer in terms of growth in traded volumes. As more people invest in physical gold too, there is rising awareness about the need to confirm the quality of the product being bought. What's driving this ETF surge? As per Value Research, the following forces are at work behind the jump in volumes: Convenience: Investors can gain gold or silver exposure without worrying about purity or safe storage. ETFs trade through a demat account, just like stocks. Cost efficiency: Physical gold comes with making charges, storage costs, and purity risks. In contrast, ETFs carry lower transaction costs, and importantly, better liquidity reduces trading friction. Investor sentiment: Historically, Akshaya Tritiya has boosted physical gold sales. Now, we see similar momentum on exchanges, with industry-wide gold ETF turnover up 2.5 times year-on-year and silver ETF turnover up 3.3 times. Silver's faster rise suggests investors are looking beyond gold for diversification. For context, back in FY25, the average daily combined industry volume (gold + silver ETFs) hovered around 60 per cent of total ETF turnover, reflecting the growing footprint of these products in the Indian market. Lower impact costs: "On Akshaya Tritiya 2025, industry-wide data showed impact costs averaging 20 basis points (bps) for gold ETFs, but some leading ETFs delivered costs as low as 2 bps. For silver ETFs, the industry average stood at 32 bps, while the most liquid products offered costs closer to 3 bps. High liquidity helps ETFs track underlying asset prices more tightly, giving investors more accurate exposure," said Value Research. Should you add gold or silver ETFs to your portfolio? While gold and silver ETFs are increasingly popular, they serve a specific role. Value Research explains in detail: Diversifiers: Gold and silver historically show low correlation to equities, making them useful for reducing portfolio risk. Precious metals tend to perform better during inflationary periods or when geopolitical risks rise. However, they are not primary growth assets. "Over long periods, equities have outperformed both gold and silver. For instance, over the past decade, gold has delivered an average annualised return of around 7-8 per cent, while Indian equity markets have returned closer to 12-14 per cent per year. Silver adds a slightly different dynamic: it's partly an industrial metal, so prices are influenced by manufacturing demand as well as investor sentiment. This can make silver ETFs somewhat more volatile but also an interesting diversifier for those who understand the risks," said Value Research in a note. 73% consumers surveyed give thumbs up to gold hallmarking but most unaware of how to validate authenticity Meanwhile, according to a survey conducted by LocalCircles, 65% of consumers who bought gold jewelelry in the last 12 months confirm that it was hallmarked; 11% say it wasn't while 24% could not tell. The six-digit Hallmarking Unique ID (HUID) or mark, which started from July 1, 2023, has been to safeguard consumers from fraudulent practices related to the purity of gold and silver, while positioning India as a major gold hub, and to enhance export competitiveness. Hallmarked gold or silver is stamped with a tiny mark by the national standards body under the Bureau of Indian Standards (BIS) Act. The mark indicates the exact purity of the metal as per the prescribed standards of regulatory authorities. For example, a hallmark reading "22K" signifies that 22 out of 24 parts of the metal are gold. Apart from the purity of the piece, the mark shows that it has been verified in a licensed laboratory certified by the Bureau of Indian Standards and the jeweller's unique identification stamp. It is advisable to only purchase hallmarked gold items such as jewellery, coins, and bars from the market to safeguard oneself from being misled. Not many know that hallmarking is not mandatory for gold jewelry items like Kundan, Polki and Jadaau jewelry; any article weighing less than two grams; any article made of gold thread; gold bullion in the shape of bar, plate, sheet, foil, rod, wire, strip, tube or coin. Further, hallmarking is also not mandatory for gold watches and fountain pens. Only 18% of consumers surveyed who bought gold jewellery in the last 12 months are aware that hallmarked articles must carry a six-digit alphanumeric code, the survey added. As 73% of consumers surveyed shared, mandatory hallmarking has increased their trust in the gold buying process. The government needs to ensure that all the jewellers across the country comply with hallmarking requirements and are subject to audits and enforcement action if found violating the rules.
Zawya
28-03-2025
- Business
- Zawya
Africa: Absa's Financial Markets Index points to encouraging improvements across the continent
The Absa Africa Financial Mar- kets index scoring is based on six main pillars: the availability and diversity of financial prod- ucts and the ease of trade; the transparency, accessibility and fairness in foreign exchange markets; transparency in tax regulations, corporate and sovereign credit ratings and the overall openness of financial systems; domestic pension fund development; and macroeconomic stability and transparency. The index also takes into account the presence and enforceability of legal standards. The overall rankings in this year's in- dex remained consistent, with the top three countries holding their positions from last year. South Africa once again secured first place, maintaining its lead for the eighth consecutive year. Despite slower economic growth, South Africa's well-established and developed finan- cial market system continues to set the benchmark in multiple areas. Mauritius came second, while Nigeria maintained third place, with Uganda, Botswana and Ghana following. This year's index shows widespread progress made across Africa, with 23 countries in the index seeing their scores improve. This marks the first year where all six pillars of the index witnessed more countries increasing their scores than decreasing. Delivering a presentation on the find- ings of the index, Nikhil Sanghani, MD of the OMFIF's Economic and Monetary Policy Institute, said there has been an overall improvement in market depth across Africa, with 19 countries experi- encing growth. This was attributed not only to more favourable local financial conditions, which have bolstered the size and liquid- ity of domestic equity and bond mar- kets across Africa, but also to significant structural advancements. Egypt, he said, exemplifies this pro- gress, showing the largest rise in market depth with an increase of 11 points, reach- ing a score of 53, with 'the introduction of trading on secondary markets for treasury bills for the first time, which has signifi- cantly improved its score for the size of the sovereign bond market as well as its liquidity.' Also notable is the rise of Environmen- tal, Social and Governance (ESG) and Is- lamic financial products, as well as green bonds, which have been introduced in markets across Kenya, Zambia, Botswana, and Rwanda. Moreover, several countries plan to diversify further - Uganda is exploring sukuk bonds, and both Malawi and Mo- rocco are looking to launch Exchange- Traded Funds (ETFs) soon, indicating a sustained trend of new asset types emerg- ing across African markets. South Africa was adjudged to be the highest scorer under market depth, with the 'largest, most liquid, and most advanced financial market on the continent'. The index shows a mixed performance across African countries in transparency and access within foreign exchange mar- kets. South Africa again led this pillar but saw a slight decline in its score due to 'slightly weaker FX reserve adequacy, which we measure in terms of months of imports,' said Sanghani. Notably, however, more countries im- proved than declined in this pillar, as some benefitted from favourable global financial conditions and lower food and fuel prices. These factors helped many commodity- importing nations rebuild FX reserves, though many countries are still strug- gling with a lack of foreign exchange, with six nations holding reserves below the standard adequacy threshold of three months of imports. In terms of specific improvements, Madagascar saw substantial progress in interbank FX liquidity, while Tanzania introduced a new FX Code of Conduct that increased transparency in its interbank markets. Additionally, recent FX reforms in Nigeria, Ethiopia, and Egypt aim to create more market-based FX regimes. Further developments include renewed access to international capital markets. After a drought last year, four sub-Sa- haran countries - Benin, Côte d'Ivoire, Kenya, and Senegal - issued international bonds in the first half of this year. Debt restructuring in Ghana and Zambia, along with ongoing negotiations in Ethiopia, also promises to improve capital market access. Sanghani added that new initiatives like diaspora bonds are gaining traction, with Kenya and Cabo Verde actively ex- ploring ways to attract diaspora savings into local investments. Mauritius, South Africa, and Egypt lead the rankings this year in market trans-parency, tax, and regulatory environ- ments. Sanghani pointed out that more countries have improved their scores than declined, a trend seen across all six pil- lars. The improvement is largely attrib- uted to the rise in corporate credit rat- ings by international rating agencies like Moody's, Fitch, and S&P, which enhance transparency for investors. 'It's not nec- essarily what credit rating they achieve, but just the fact that they have a rating, which provides more transparency for investors.' Fifteen countries now offer incentives like tax breaks for issuing ESG assets, while 23 countries have formally inte- grated ESG into their market frameworks. Pension fund development In local pension fund development, Na- mibia leads for the fifth consecutive year, with pension assets per capita nearing $5,000, the highest on the continent. Other Southern African nations also performed well, but in 15 of the participat- ing economies, pension assets remain be- low $100 per capita, reflecting the overall low average score of just 28 in this pillar. Sanghani also pointed to new regula- tory efforts in some countries, such as Botswana, Lesotho, and Namibia, where recent legislation encourages pension funds to invest more in domestic markets to fuel growth. Additionally, he empha- sised the growing use of mobile-based apps and online platforms in 19 countries to promote retail investment in local fi- nancial markets, and 'take that money from under the mattress'. More countries scored improvements in macroeconomic stability and trans- parency than those that declined. This improvement is partly attributed to global factors, such as falling inflation and rising economic growth in several African na- tions. Botswana, Uganda, and Tanzania ranked highest in this pillar, with Rwanda, Madagascar, and Ethiopia also showing significant improvements due to notable declines in inflation. However, Sanghani noted that some countries, such as Malawi, Nigeria, and Angola, continue to face high inflation, which negatively affects their scores. For instance, Angola saw inflation rise sharply over the past 12 months due to currency depreciation, pushing inflation above 30%. In contrast, countries like Ghana, Rwanda, Madagascar, and Ethiopia have experienced significant disinflation, with the median inflation rate across partici- pating countries dropping to 4.6% in June 2024 from 7.9% a year earlier. Sanghani also underscored that exter- nal debt presents a major concern, with external debt ratios rising in 18 countries over 2022-2023. Additionally, 18 countries are either in or at risk of debt distress, according to the International Monetary Fund (IMF), which represents one of the most significant macroeconomic vulner- abilities for African nations at present. Divergence in legal standards The index also shows a significant di- vergence in performance across African countries in terms of the 6th pillar, legal standards and enforceability. Mauritius and South Africa continue to lead, each scoring the maximum 100 points. These countries set the benchmark for legal standards in the region. The only new development over the past year comes from Ghana, which re- ceived a clean legal opinion from the In- ternational Capital Market Association for its use of the Global Master Repur- chase Agreement (GMRA). This increased Ghana's score to 90, up from 85 in the previous year. Ghana is now one of four countries in the index with at least one clean legal opinion from an international body. Despite these positive developments, Sanghani noted that many countries are working on legal amendments to support netting provisions and seek clean legal opinions. These legal reforms, while still in progress, indicate potential for future improvements in the legal standards and enforceability pillar across the continent. There have also been significant strides made in developing market infrastructure. Progress was particularly evident in the growing focus on ESG, greater product di- versity, and enhanced transparency across African markets. However, he stressed that challenges remain in key areas. Pension systems still show relatively low scores in many coun- tries, while legal frameworks also need further development. Lastly, managing external debt remains a major macro- economic vulnerability for many African nations. n © Copyright IC Publications 2022 Provided by SyndiGate Media Inc. (
Yahoo
04-03-2025
- Business
- Yahoo
Don't rely on EPF alone, diversify investments, says academician
Malaysia's Employees Provident Fund (EPF), on March 1, announced a 6.3 per cent dividend for its Conventional and Syariah savings for 2024. While this offers some relief to EPF members, it should serve as a reminder of the need for proactive financial planning, said an academician. Paul Anthony Maria Das, a senior lecturer at the School of Accounting and Finance at Taylor's University, in his commentary that was sent to Twentytwo13, added that relying solely on EPF savings is no longer sufficient for long-term financial security. "Individuals must take a hands-on approach to wealth management to stay resilient against economic fluctuations and inflation," Maria Das said. "With rising living costs and economic uncertainties, passive savings is no longer an option." He said to build financial resilience, individuals should explore, among others: • Stocks, bonds, Real Estate Investment Trusts (REITs), and mutual funds for diversification. • Private Retirement Schemes (PRS) for additional tax benefits and compounding advantages. • Multiple income streams such as dividends, rental income, or side businesses. • Blue-chip dividend stocks for steady income and capital growth. • Exchange-Traded Funds (ETFs) for diversified market exposure. • Gold and commodities as inflation hedges. • Insurance-based savings plans for financial security. "Young professionals should maximise EPF benefits while diversifying investments by allocating 10-20 per cent of their income to voluntary contributions, and 15-30 per cent to other investment vehicles." Maria Das highlighted that for an individual with RM200,000 in EPF, a 6.3 per cent dividend yields RM12,600 annually, compared to RM10,000 at a 5 per cent rate. "While the difference may seem small, it significantly impacts long-term wealth accumulation. Regardless of the rate, maintaining a diversified investment portfolio is essential for financial security." "The 6.3 per cent EPF dividend for 2024 is a positive outcome, but it should not lead to complacency. Strategic wealth management – through diversification, informed decision-making, and adaptation to economic shifts – is key to long-term financial stability." "A well-rounded financial plan extends beyond EPF, ensuring security in an ever-changing economic landscape," he added.
