Fund managers are introducing exchange-traded funds into the Indian market, despite the fact that actively managed mutual funds still dominate in the country. One possible reason for this is the high performance of active large-cap stocks funds in the country, which have outperformed indexed offerings, returning 15% over the last five years. The fund manager said he was not surprised by the success of ETFs and preferred equity funds, given their low cost to investors compared with index funds. Distributors of fund products also have more incentive to sell mutual funds, due to the greater commissions they can reap thanks to the products' higher expense ratios.
Fund managers are introducing exchange-traded funds into the Indian market, despite the fact that actively managed mutual funds still dominate in the country. One possible reason for this is the high performance of active large-cap stocks funds in the country, which have outperformed indexed offerings, returning 15% over the last five years. By comparison the BSE Sensex index has returned 12%. Distributors of fund products also have more incentive to sell mutual funds, due to the greater commissions they can reap thanks to the products' higher expense ratios.