ETFs Beyond Metros: The Surging Trend in Tier-2 Towns
In a groundbreaking study titled “Decoding ETF Perceptions,” Mirae Asset Mutual Fund sheds light on the evolving landscape of Exchange-Traded Funds (ETFs) in India. The study, conducted by YouGov India, surveyed 2109 investors across 15 cities, encompassing both metros and tier-2 towns.
Rising Interest in Tier-2 Towns
Surprisingly, the study unveils that ETFs are gaining more popularity in tier-2 towns compared to metropolitan areas. This shift in interest could potentially reshape the investment landscape in India, showcasing the growing financial awareness and aspirations in smaller cities.
Investor Understanding and Age Dynamics
A noteworthy revelation is that 60% of the respondents claim to possess a good understanding of ETF products offered by the Mutual Fund industry. The sweet spot for ETF popularity appears to be the 36-45 age group, indicating a trend among middle-aged investors toward embracing this investment instrument.
Investment Horizon and Preferences
The study also sheds light on investor preferences, with a significant inclination towards large-cap and mid-cap-based ETFs. Investors, both current and potential, seem to favor a 1-3-year investment horizon, signaling a desire for mid-term returns.
Motivations Behind ETF Investments
One of the primary motivations for investors opting for ETFs is the expectation of generating market returns and outperforming active mutual funds. Savvy investors, utilizing investment platforms, consider ETFs as a transparent and efficient investment tool.
Influencing Factors and Barriers
Notably, YouTube emerges as a major influencing factor, especially among users of Over-The-Top (OTT) platforms. However, the study highlights barriers such as hidden risks and a relative lack of knowledge that the ETF industry needs to address to foster broader adoption.
Key Factors Driving ETF Market
Liquidity, market speed, and the availability of innovative products are identified as key factors driving the ETF market’s growth. Mirae Asset’s CEO, Swarup Mohanty, emphasizes the need for the industry to address challenges while capitalizing on the evident growth potential.
Future Outlook and Industry Implications
In response to the findings, Mirae Asset sees an opportunity to further innovate and cater to the needs of both current ETF investors and potential intenders. The study underscores the need for increased awareness, especially among those considering ETFs, with tier-2 cities offering untapped growth potential.
As ETFs continue to gain traction in India, the industry is at a crucial juncture. The study not only provides insights into the current investor landscape but also sets the stage for future developments. With the right strategies in place, ETFs have the potential to become a cornerstone of investment portfolios across the country.
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