SPIcE, Indias first exchange-traded fund (ETF)
tracking the BSE-Sensex from Prudential ICICI, has got
listed on the Bombay Stock Exchange (BSE) and the Delhi
Stock Exchange (DSE).
ETF is a hybrid
product that has features of both an open-ended mutual
fund and an exchange listed security. The price of one
SPIcE unit will be equal to 1/100th of the Sensex value.
For example, if the current Sensex is at 3100, the price
of one SPIcE unit will be Rs 31. The scheme will be managed
by PruICICI and listed on both the BSE and the DSE.
unique feature of SPIcE, and for that matter of all ETFs,
is its creation and redemption process. While a majority
of the investors will trade SPIcE units through their
stockbrokers on the stock exchange, authorised participants
(brokers, institutions) will be eligible to create or
redeem SPIcE units directly with the fund by exchanging
the basket of Sensex securities. Such a process helps
in maintaining parity between the traded price of a SPIcE
unit and its net asset value.
be bought and sold like any equity share on the BSE terminal
through a stockbroker. The minimum lot size is one unit
of SPIcE. Effectively, a retail investor can buy one SPIcE
unit for Rs 31 and hold the same in his demat account
just like any other security.
advantages of SPIcE include:
- Instant exposure
to a well-diversified portfolio of 30 quality stocks
forming part of the Sensex
- Buying and selling
of SPIcE units on a real-time basis just like any other
- Since once SPIcE
unit is equal to 1/100th of the Sensex, the minimum
investment for a retail investor is as low as Rs 31
- The price of
each unit of SPIcE would move in tandem with the Sensex
making the whole process extremely transparent
- No sales load,
although normal brokerage commissions apply
- No high management
and sponsor fees