UTI India Sovereign Bond ETF Launched

UTI India Sovereign Bond ETF tracks the performance of the Nifty India Select 7 Government Bond Index, which comprises of top 7 most-liquid, local currency sovereign bonds issued by the Central Government of India. The index has been specifically created by NSE Indices, India’s leading index provider.

The index methodology is uniquely designed for global investors considering favorable factors such as high secondary market liquidity, high unutilized limits for Foreign Portfolio Investors (FPIs) and also giving preference to government bonds categorized under the Fully Accessible Route (FAR) by RBI. BofA Securities has provided seed capital and has been appointed as Authorized Participant.  

Imtaiyazur Rahman, CEO of UTI AMC said, “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.”

The UTI India Sovereign Bond ETF is domiciled in Ireland and structured in compliance with the European regulatory framework of UCITS (Undertaking for Collective Investments in Transferable Securities). The investment manager of the ETF is UTI International, the Singapore based subsidiary of UTI Asset Management Company (UTI AMC).

This ETF will allow global investors to access India’s vibrant government securities market without having to deal with the complex access procedures typically associated with Indian fixed income. As India becomes increasingly relevant on the global investment landscape, investors will seek Indian yield in addition to equity returns. While India is presently not included in global fixed income benchmarks, this ETF could mark an inflection point in recognition of India’s bond markets.  

Vikram Limaye, MD & CEO of NSE said, “NSE firmly believes that innovation in financial products is important for the development of Indian capital markets. We are delighted to have partnered with UTI on this landmark product at the intersection of yield and liquidity – two key variables for global investors. This is an important stepping stone towards attracting global money in Indian government securities market through the ETF route.” 

Jayesh Mehta, Managing Director & Country Treasurer at Bank of America N.A., India said: “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”.