UTI International Launches Indian Sovereign Bond ETF

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UTI International has launched an Indian Government Bond ETF listed on the Amsterdam Stock Exchange.

The Sovereign Bond ETF will track the performance of the Nifty India Select 7 Government Bond Index, which comprises the seven most liquid local currency sovereign bonds issued by the Center.

The index was specifically created by NSE Indices. The methodology of the index is specially designed for global investors considering favorable factors such as high secondary market liquidity, high unused limits for foreign portfolio investors and also giving preference to government bonds classified under the road fully accessible by the RBI. BofA Securities provided seed capital and was appointed an authorized participant.

The UTI India Sovereign Bond ETF is domiciled in Ireland and structured in accordance with the European regulatory framework for UCITS (Undertaking for Collective Investment in Transferable Securities).

The investment manager of the ETF is UTI International, the Singapore-based subsidiary of UTI Asset Management Company.

This ETF will allow global investors to access the dynamic Indian government securities market without having to face the complex access procedures typically associated with Indian fixed income securities.

Dynamic bond market

As India becomes increasingly prominent in the global investment landscape, investors will be looking for Indian yields in addition to equity yields. Although India is currently not included in the global fixed income benchmarks, this ETF could mark an inflection point in the recognition of Indian bond markets.

Imtaiyazur Rahman, CEO of UTI AMC, said the ETF will connect the country’s bond markets with the world and attract global investment to India.

Vikram Limaye, Managing Director and CEO of NSE, said innovation in financial products is important for the development of Indian capital markets and the product offers a game at the intersection of yield and liquidity – two variables keys for global investors.

This is an important stepping stone to attract global money to the Indian government securities market through the ETF, he said.

Jayesh Mehta, Managing Director and Country Treasurer, Bank of America NA, India, said India is one of the last major investment grade rated economies whose sovereign bonds are under-held by institutional investors.

The ETF structure will raise market awareness of Indian sovereign bonds as an asset class and improve affordability at a time when global investors seek to diversify yield opportunities, he added.

The ETF will be listed on Euronext Amsterdam AEX initially, and eventually on other stock exchanges in Europe and Asia.


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