LONDON: Two investment management firms on Thursday announced plans for an exchange-traded fund (ETF) dedicated to the debt of state-run companies, that they said would be the first such vehicle in the world.
The ETF, to be listed on the London Stock Exchange and launched to coincide with PM Narendra Modi’s visit to Britain, is being launched by British firm Sun Global Investments and Indian firm Zyfin Funds.
The fund will offer investors a basket of bonds issued by India’s public sector companies – those which are at least 51 per cent owned by the government – such as Indian Railways and Power Finance Corporation.
India, with a reform-focused government, is among the few bright spots in emerging markets which have suffered in recent years from weaker growth, a commodity price pullback and the possibility of higher US interest rates.
Indian assets have been in demand but foreign investors can so far buy locally issued bonds only via a quota system, though these quotas are gradually being expanded. The sovereign does not have tradeable hard currency debt.
The fund, named the LAM Sun Global ZyFin India Sovereign Enterprise Bond UCITS ETF, will be listed on November 19.
The timing of Modi’s visit is also being used by index provider FTSE Russell to launch its first India debt index in partnership with India’s biggest lender, the State Bank of India.
The FTSE-SBI India Bond index will be used by SBI’s asset management arm for a new investment product, the parties said in a statement.