Short form for the Sensex UTI Notional Depository Receipts. Sunders will be a fund managed by the UTI and co-branded by the Bombay Stock Exchange. ETFs are passively managed funds that track a particular index and have the flexibility to trade like common stock. ETFs combine the attributes of a mutual fund with those of a stock. ETFs also offer hedging and arbitrage opportunities.
Investors can go long or short in ETFs to hedge against possible losses in equity expo-sures.
There are also real time arbitrage opportunities between cash, fu-tures and ETF markets. Moreover the ETFs have no compulsory redemp-tion dates allowing investors to hold on to their positions for as long as they want. Vaish said that Sunders will be an open ended fund which will track the Sensex. It is expected to be listed on the BSE by January 2001 and subsequently on other exchanges. Therefore, if the Sensex is poised at 3900 points, one Sunder unit will be Rs 39 of which Rs 10 will be the face-value and the balance premium.