India’s exchange-traded fund market will likely be driven by retail investors using digital investment channels in the next phase of growth, according to Aniruddha Chatterjee, chief executive officer of NSE Indices Ltd, the index arm of the National Stock Exchange of India.
Around 75%-80% of ETF assets under management in India are now held by institutional investors, with the balance in the hands of retail and high-net-worth investors.
Chatterjee says the ETF industry growth has been robust, with assets expanding at an annual rate of around 20%-22%.
“The next phase of growth will come when retail participation increases meaningfully. That segment is likely to grow at a much faster pace going forward,” he says in an interview with Asia Asset Management.
He points to digital distribution channels as a key driver for greater retail participation. He says financial technology firms, together with large financial institutions with strong online reach, are helping to bring ETFs to a wider audience across India’s diverse investor base.
“Fintech players are doing an excellent job in expanding access,” he says.
According to Chatterjee, retail investors are increasingly turning to ETFs not just as trading instruments, but as core investment tools. “We are entering a phase where ETFs are no longer seen as a fringe investment product. They are increasingly being used as investment solutions, particularly for asset allocation.”
Investor education is also becoming a critical pillar to drive retail participation. NSE Indices has launched a dedicated platform to provide data on ETF performance, sector exposure and listings, aimed at improving transparency and decision-making.
“As an index provider, our role is to enhance awareness and provide information so that investors can make informed decisions,” Chatterjee says.
