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The Exchange Traded Funds market in India is witnessing elevated growth, fueled by increasing investor interest in diversified portfolios, favorable regulatory changes, and enhanced accessibility to financial markets through digital platforms.

Customer preferences: Investors in India are increasingly gravitating towards Exchange Traded Funds (ETFs) as they seek cost-effective and diversified investment options. This trend is particularly pronounced among younger demographics, who are more tech-savvy and inclined to use digital platforms for trading. The rise of financial literacy initiatives is empowering a broader audience to explore investment avenues, while a growing preference for sustainable and thematic investing reflects cultural shifts towards social responsibility. Additionally, the convenience of mobile trading apps is enhancing accessibility, attracting a new generation of retail investors.

Trends in the market: In India, the Exchange Traded Funds (ETFs) market is experiencing significant growth as investors increasingly seek low-cost, diversified investment options. This trend is particularly evident among millennials and Gen Z, who leverage digital trading platforms for seamless transactions. Financial literacy campaigns are enhancing awareness, enabling a wider demographic to engage with ETFs. Furthermore, the demand for sustainable and thematic ETFs is rising, reflecting a cultural shift towards socially responsible investing. These developments present opportunities for asset managers to innovate product offerings and engage a new wave of retail investors, ultimately shaping the future landscape of the investment funds market.

Local special circumstances: In India, the Exchange Traded Funds (ETFs) market is influenced by unique local factors, including a diverse investor base and regulatory frameworks that promote financial inclusion. The growing young population, coupled with a cultural shift towards investment awareness, drives demand for innovative products. Additionally, the government's initiatives to enhance digital infrastructure facilitate easier access to financial markets. Local preferences for thematic investments, such as green energy and technology, further shape ETF offerings, distinguishing India's market dynamics from global counterparts.

Underlying macroeconomic factors: The Exchange Traded Funds (ETFs) market in India is significantly influenced by macroeconomic factors such as overall economic growth, inflation rates, and interest rate trends. A robust GDP growth rate encourages investor confidence and increases participation in equity markets, which in turn boosts ETF demand. Moreover, favorable fiscal policies, such as tax incentives for long-term investments, enhance attractiveness for retail investors. Inflation control measures and stable interest rates also play a crucial role, as they impact investment strategies. Additionally, global economic trends, including shifts in foreign investments and trade dynamics, can affect liquidity and market sentiment, further shaping the performance of ETFs in India.

Data coverage:

The data encompasses B2C enterprises. Figures are based on financial values/ transaction values/ turnover ratios/ number of funds data within the investment funds market.

Modeling approach / Market size:

Market sizes are determined by both a bottom-up and top-down approach, building on a specific rationale for each market segment. As a basis for evaluating markets, we use market research & analysis, and data from European central banks, World Bank, national central bank statistics, and international organizations, such as OECD, and publicly available databases. In addition, we use relevant key market indicators and data from country-specific associations, namely gross domestic product (GDP), consumer price index(CPI), lending interest rate, central bank interest rate, employment rate, secured overnight financing rate (SOFR), and tax rates. This data helps us estimate the market size for each country individually.

Forecasts:

In our forecasts, we apply diverse forecasting techniques. The selection of forecasting techniques is based on the behavior of the particular market. In the market, we use the HOLT-damped Trend and ARIMA methods to forecast future development. The main drivers are GDP per capita, consumer price index (CPI), and central bank interest rate.

Additional notes:

The market is updated twice a year in case market dynamics change. The impact of the COVID-19 pandemic and the Russia-Ukraine war is considered at a country-specific level.