Mumbai: SPIcE, India’s 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.

A 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.

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 for Rs 31 and hold the same in his demat account just like any other security.

Major 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 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, although normal brokerage commissions apply
• No high management and sponsor fees