For investors tired of buying Sensex and Nifty exchange traded funds (ETFs), there's a new option on the cards. HDFC AMC has filed a draft document for an MSCI India Index based ETF with market regulator Sebi. If the product gets the green signal, this could be an interesting new addition to 20-odd ETFs already in the market.

Since ETFs are passive investment vehicles, they are only as good as the underlying index they track. Most of the ETFs currently available in the market track the Sensex and the Nifty. There are a few which mimic thematic or strategy indices like Nifty Dividend Opportunities 50, Nifty Next 50, Nifty Free Float Midcap 100, Nifty Bank, BSE 100, CNX 100, and overseas benchmarks like Nasdaq 100.

So, how different is the MSCI India Domestic Index? The 84-constituent MSCI India Domestic Index is designed to measure the performance of the large and mid cap segments of the Indian market. The index is based on the MSCI Global Investable Market Indexes and uses the Domestic Inclusion Factor (DIF) as the free-float adjustment factor for the market capitalization of each security. Simply put, if you invest in an ETF based on the MSCI India Domestic Index, you can get a wider representation of the Indian market.

It is estimated that about 70-80% of the money flowing into India is from investors who use MSCI's benchmark indices. Because MSCI is the de facto global standard in the index business, an ETF based on MSCI's India index is likely to find good traction. An India-based ETF could also help foreign investors sidestep the cap on FII ownership in individual stocks.

The MSCI India Domestic Index's top 10 constituents are HDFC Bank (Financials), HDFC (Financials), Infosys (Info Tech), ITC (Consumer Staples), RIL (Energy), ICICI Bank (Financials), TCS (Info Tech), L&T (Industrials), Tata Motors (Consumer Discretionary) and Axis Bank (Financials). These 10 stocks make for nearly 45% of its weight, as per its latest update.

From a sectoral point of view, the MSCI India Domestic index is heavily inclined towards Financials (31.36%), Infotech (13.21%) and Consumer Discretionary (11.53%). It also has exposure to Consumer Staples, Energy, Materials and Healthcare between 7-10%. Industrials, Utilities and Telecommunication Services each have less than 5% share.

An index is as good as its performance. The MSCI India Domestic Index has performed better than the Sensex in recent years. MSCI India Domestic Index, in INR terms, grew by 4.54% in 2016 when Sensex inched up by just 1.95%. In 2015, the index dipped by 1.17% compared to a steeper 5.03% drop in Sensex. A year before, i.e. 2014, when the Sensex rose by 29.89%, MSCI India Domestic Index jumped by 35%. However, the index under-performed Sensex in 2011, 2012 and 2013.