British wealth management firm Sun Global Investments has partnered with Zyfin Funds to launch the first Indian fixed income ETF for UK investors.
The LAM Sun Global ZyFin India Sovereign Enterprise Bond UCITS ETF aims to provide international investors exposure to a basket of Indian public sector corporate bonds.
The fixed income ETF, which will be listed on the London Stock Exchange from 19 November, will be Europe’s first physically replicating Indian ETF backed by real underlying securities as opposed to notional securities or derivatives.
The launch follows Indian Prime Minister Narendra Modi’s arrival in London, UK for a three-day visit to further boost financial ties between the UK and India.
Tracking the ZyFin India Sovereign Owned Enterprise Bond Index, the fund will be distributed and traded by Sun Global Investments.
The fund will provide foreign investors the opportunity to invest in difficult-to-access but well researched AAA rated Indian companies.
The UCITS compliant ETF has been designed to provide exposure to corporate bonds which have an average duration of over 10 years and although partly state owned, yield higher than an Indian Sovereign Bond at around 7%.
Sun Global Investments CEO Mihir Kapadia said: "As a London-based FCA regulated company, we are very pleased to partner with ZyFin and work with the London Stock Exchange to provide global investors with an efficient way to invest in bonds issued by high-quality Indian state-owned companies.
"This venture shows the versatility, creativity and flexibility of the financial sector in London and the investment opportunities available as a result of the rising economic growth in India.
"This listing of this fund reflects our view that Indian nominal yields are among the highest in the world. With India expected to overtake China next year as the world’s fastest growing economy, we are confident that new investments innovations such as ours will help reinforce its growth trajectory", Kapadia added.
Sanjay Sachdev, Executive Chairman at ZyFin, commented: "This is the first time global investors will have access to AAA rated government owned Indian companies through an exchange traded fund and with the Indian government keen to stimulate outside investment, this is a very exciting time to be investing in the country.
"India’s GDP has doubled in eight years from $1 trillion in 2007 to $2 trillion in 2015 and the IMF forecasts GDP growth of 7.3%."