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Sun Global, ZyFin Lists India Bond ETF For Overseas Investors

Investors in Europe will be able to invest in a basket of corporate bonds through an Exchange Traded Fund (ETF) that’s got listed on the London Stock Exchange

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The first overseas ETF follows the launch of a rupee denominated so-called `masala bonds‘ by IFC Washington. More financial institutions plan to sell the rupee denominated masala bonds to overseas investors in the coming months.

Indian bond yields are among the highest in the world of similarly rated countries. Launched by Sun Global Investments and ZyFin Holdings, the ETF is named LAM Sun Global ZyFin India Sovereign Enterprise Bond ETF will be backed by real underlying securities instead of just notional securities and derivatives.

The overseas fund will track ZyFin India Sovereign owned enterprise bond index, that’s based on bonds of government-owned companies. In this case, the fund has invested in top rated corporate bonds with a residual maturity of between four to 20 years, and an average maturity of 8.97 years.

According to the issuers, the average yield of this fund is close to 8.23 per cent in Indian rupees, which is much higher than the return on sovereign bonds.

An ETF, similar to a mutual fund, is a marketable security that tracks an index or bonds, commodities, or a basket of assets, which in this case is a basket of corporate bonds from state-owned companies.