Concentrated portfolio of bank ETFs under Sebi lens

To look at diversification risk from bank ETFs investing in stocks of banking indices

Ashley Coutinho  |  Mumbai 

The Securities and Exchange Board of India (Sebi) is looking at the diversification risk from bank exchange-traded funds (ETFs) investing in stocks of the banking indices of the two major bourses. Of a total of 12 banking scrips in the National Stock Exchange's Nifty Bank index, three — HDFC Bank, ICICI and Kotak Mahindra — contribute 45 per cent to the index weight. The bottom five contribute five per cent. Similarly, for the BSE exchange's Bankex, the top five out of 10 stocks contribute four-fifths to the weight. These indices are created on a ...

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Concentrated portfolio of bank ETFs under Sebi lens

To look at diversification risk from bank ETFs investing in stocks of banking indices

The Securities and Exchange Board of India (Sebi) is looking at the diversification risk from bank exchange-traded funds (ETFs) investing in stocks of the banking indices of the two major bourses.Of a total of 12 banking scrips in the National Stock Exchange's Nifty Bank index, three -- HDFC Bank, ICICI and Kotak Mahindra -- contribute 45 per cent to the index weight. The bottom five contribute five per cent. Similarly, for the BSE exchange's Bankex, the top five out of 10 stocks contribute four-fifths to the weight. These indices are created on a free-float method. Here, the price is multiplied by the number of shares readily available in the market and excludes locked-in shares held by promoters, government, etc.Under the diversification norms, mutual fund (MF) schemes cannot invest more than 10 per cent in a single stock. However, this rule is not applicable to ETFs, as these mimic the weight of stocks that comprise the ETF basket. While open-ended sectoral funds can reset the ... The Securities and Exchange Board of India (Sebi) is looking at the diversification risk from bank exchange-traded funds (ETFs) investing in stocks of the banking indices of the two major bourses. Of a total of 12 banking scrips in the National Stock Exchange's Nifty Bank index, three — HDFC Bank, ICICI and Kotak Mahindra — contribute 45 per cent to the index weight. The bottom five contribute five per cent. Similarly, for the BSE exchange's Bankex, the top five out of 10 stocks contribute four-fifths to the weight. These indices are created on a ... image
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