UTI International, the Singapore-based subsidiary of UTI Asset Management Company (UTI AMC), has launched an Indian Government bond ETF. The ETF was listed on the Amsterdam Stock Exchange (AEX) on the 8th of November, 2021.

UTI India Sovereign Bond ETF tracks the Nifty India Select 7 Government Bond Index, which includes the top seven most-liquid, local currency sovereign bonds issued by the Central Government of India. That said, the index has been specifically created by NSE indices

Fund strategy

The index methodology is unique in that it considers favourable criteria such as significant secondary market liquidity, a high level of unutilized limits of Foreign Portfolio Investor (FPI), and a preference for government bonds classified as Fully Accessible Route (FAR) by the RBI.

How it benefits global investors?

– This ETF would enable foreign investors to gain exposure to India’s growing government securities market without having to navigate the typically difficult entry processes associated with Indian fixed income.

– As India’s global investment landscape grows more important, investors will seek Indian income in addition to equities gains. While India is not currently included in global fixed income benchmarks, this ETF could signal a turning point in the country’s bond markets’ recognition.

“UTI has had a history of launching innovative products, and this ETF will connect Indian fixed income markets with the world and drive global investments to India. We are proud to have partnered with NSE Indices and BofA Securities to bring this ETF to life,” said Imtaiyazur Rahman, CEO of UTI AMC.

Features of the UTI India Sovereign Bond ETF

-Initial listing exchange: Euronext Amsterdam AEX, followed by various European and Asian markets.

-Benchmark index: Nifty India Select 7 Government Bond Index -This is a new index that includes the top seven most liquid Central Government of India (GOI) assets with residual maturities of more than two years.

-Index provider: NSE Indices Limited, a wholly-owned subsidiary of the National Stock Exchange of India, is the index provider. NSE Indices own the Nifty brand.

– Citibank, Ireland, is the administrator and global custodian. “India is one of the last remaining large investment-grade rated economies whose sovereign bonds are under-owned by institutional investors. The ETF structure will likely raise market awareness of Indian sovereign bonds as an asset class and improve accessibility at a time when global investors are seeking to diversify yield opportunities,” said Jayesh Mehta, Managing Director & Country Treasurer at Bank of America N.A., India.