HDFC Mutual Fund files documents for 9 Exchange Traded Funds

Close on the heels of some of the new-age fund houses focusing on low-cost passive funds to attract the new generation of investors, the much older and bigger fund houses also seem to be eyeing the passive fund space to complement their existing active fund offerings.

HDFC Mutual Fund, which is the third-largest fund house of the country with assets under management totalling Rs 4.2 lakh crore, has filed a draft document for nine exchange-traded funds or ETFs. The funds are based on various themes or sectors including banking, information technology, low volatility, growth and momentum.

According to information available with the Securities and Exchange Board of India (SEBI), the fund house, which is known for its actively managed schemes with huge AUMs, has filed the documents for schemes like HDFC Nifty Growth Sectors 15 ETF, HDFC Nifty IT ETF, HDFC Nifty Next 50 ETF, HDFC Nifty Private Bank ETF, HDFC Nifty100 Low Volatility 30 ETF, HDFC Nifty100 Quality 30 ETF, HDFC Nifty200 Momentum 30 ETF, HDFC NV 20 ETF and HDFC Nifty 100 ETF.

Interestingly, the latest filings have come around a month after Navi Mutual Fund -- founded by Flipkart founder Sachin Bansal -- filed a draft document with the capital markets regulator for 11 passive fund schemes including, Pharma Index Fund, IT Index Fund, Nifty Bank Index Fund and Nifty Midcap 150 Index Fund, among others.

Another new entrant in the mutual fund arena, Zerodha, has also stated in the past that it would launch passive funds so that investors get access to low-cost investment options.

Passive funds are those that replicate a particular index by having stocks in the same weightage as that of the index. This process does not require any active fund management, which also leads to lower fund management costs compared to an active scheme, wherein the fund manager analyses and picks stocks to maximise returns.

The most popular example of a passive fund is an index fund that could be based on the Sensex of Nifty or any other sectoral index. A Sensex-based fund would have in its portfolio 30 stocks in the same weightage as they are in the Sensex.

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