Among the draft of the offer documents presented with Sebi are many funds of funds (FOF) that are intended to invest in the same family family. For example, Silver Fof investing in the Silver ETF of the same family. Perhaps, there is more potential to use FOF to sacrifice products with a basket or ETF. Here, we discuss the wallets of ETF administered.
Passive-peasive
An ETF portfolio administered involves three particles: you (investor), the portfolio manager who builds an ETF portfolio and the ETF manager who passively manages the ETF (underlying investment). Suppose an ETF administrator of administered ETF decides to create a portfolio that consists of a gold ETF, an ingenious ETF and an ETF of average capitalization. This portfolio administrator must continually administer the position with the aim of timing the market to generate yields.
Keep in mind that each ETF-Gold, Nifty and Mid-Cap-are passively administered by the respective ETF manager. If you have to assign participants to the investment process, you have a passive-peasive-peasive approach (you) -Activated (ETF portfolio manager) and passive (ETF manager).
Consider two arguments. The objective of the administrated ETF portfolio administrator is to generate alpha continuously changing the assignment to ETF of style, sector and strategy. For example, Nifty 50 ETF is a style style (based on size), Nifty Bank Ethf is a sectoral ETF and NIFTY100 Low Volatility 30 is an ETF strategy. Enough to understand an administered ETF portfolio is relatively easy to create using the style and ETFs of the sector.
It is optimal to passively manage investments in an administrated ETF portfolio. If the entrance and exit are frequent and do not work well, the portfolio yields could be the managed performance of the ETF portfolio administrator. It is crucial that the portfolio administrator considers the style and universe of the sector, including third -party ETFs to choose those that are actively negotiated.
Conclusion
At the macro level, the administrated ETF portfolio is based on the capacity of the Portfolio administrator of selecting ETF to invest. For example, the manager can decide to invest in a pharmaceutical ETF instead of a banking ETF. At the granular level, the administered ETF portfolio puts in the foreground the time of the market of a portfolio manager. Therefore, alpha yields can come from allocation (proportion of ETF sector and style) and market synchronization (when to buy and sell). This product must be kept out of the nucleus portfolio. The administrated ETF portfolio could be structured as an open background (FOF structure).
(The author offers training programs for people to manage their personal investments)
Posted on May 19, 2025