Pru ICICI unveils SPIcE, India’s first ETF to track BSE-Sensex

Our Markets Bureau
03 January 2003

Mumbai: Prudential ICICI Asset Management Company (PIAMC) has introduced SPIcE, India’s first exchange-traded fund (ETF) to track the Bombay Stock Exchange (BSE)-Sensex.

SPIcE is a hybrid product having features of both an open-ended mutual fund (such as diversification and lower transaction costs) as well as those of an exchange-listed security (intra-day trading and listing on the BSE or the Delhi Stock Exchange [DSE]).

SPIcE can 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 and hold the same in his Demat account just like any other 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 Prudential ICICI and listed on both the BSE and the DSE.

Key advantages of SPIcE:

• 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 equity share
• 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 (3100/100)
• The price of each unit of SPIcE would move in tandem with the Sensex, making the whole process extremely transparent No sales load, normal brokerage commissions and low management and sponsor fees apply

Key applications of SPIcE:

• Equitising cash
• Cash-flow management
• Diversifying sector exposure
• Shorting or hedging index exposure
• Arbitrage between SPIcE and basket trading and between SPIcE and index futures