DWS rolls out local currency Indian sovereign bond ETF

Sep 15th, 2022 | By | Category: Fixed Income

DWS has launched a new fixed income ETF in Europe providing access to rupee-denominated Indian government bonds.

DWS rolls out local currency Indian sovereign bond ETF

Indian government bonds may be included in flagship emerging market debt indices in the near future.

The Xtrackers India Government Bond UCITS ETF has been listed on London Stock Exchange in US dollars (XIGB LN) and on Deutsche Börse Xetra in euros (XIGB GY).

The fund, which has come to market with approximately $50 million in initial assets under management, is sub-advised by Nippon Life India Asset Management (Singapore).

It comes with an expense ratio of 0.38%, one basis point cheaper than the L&G India INR Government Bond UCITS ETF (TIGR LN) which debuted in October 2021.

DWS notes that India’s economy is growing strongly with real gross domestic product (GDP) increasing by 8.7% in 2021 and the International Monetary Fund forecasting a rise of 7.4% in 2022 and 6.1% in 2023.

The country’s debt-to-GDP level has also been relatively stable at around 70% for the last decade, while the largest democracy in the world has never defaulted on its debt.

Additionally, being a net importer of energy, the Indian rupee is negatively correlated to energy prices, meaning a potentially higher resilience of Indian government bond exchange-rate adjusted returns during economic downturns.

As of August 2022, the total market capitalization for Indian government debt was more than $1 trillion, placing the country’s sovereign debt market between that of Canada and Spain. In the emerging markets’ local currency space, it is second only to China’s treasury market.

Due to limited liquidity and accessibility, Indian government bonds are currently not included in flagship bond indices. That may be poised to change, however, with JP Morgan recently opening a fresh consultation with investors on whether to include Indian government bonds within the JP Morgan Government Bond – Emerging Markets Global Diversified Index. Such a move is expected to drive over $30 billion in passive investor flows into India’s government bond market.


The ETF directly replicates the JP Morgan India Government Fully Accessible Route (FAR) Bond Index which consists of fixed-rate and zero-coupon rupee-denominated bonds that have been issued by the Indian central government and are available to non-residents under the Fully Accessible Route (FAR).

The FAR is a separate channel established by the Reserve Bank of India, in consultation with the government of India, through which eligible investors can invest in specified government securities without any investment ceiling.

To be eligible for index inclusion, bonds must have a minimum time to maturity of at least six months and an issue size above $1 billion equivalent.

The index currently has an average duration of approximately six years, while India’s sovereign bonds are rated ‘BBB-‘.

Michael Mohr, Head of Product Specialists, Passive, DWS, said: “DWS is continuously developing its range of ETFs in order to meet the ever-evolving needs of investors. With this new product, we are giving our clients access to the attractive Indian bond market. Nippon Life India Asset Management brings its deep knowledge of the Indian fixed income market.”

Sundeep Sikka, Executive Director and CEO at Nippon Life India Asset Management, added: “We are delighted to provide access to India’s growth story to DWS’s investor base through this differentiated product offering. Our long-term track record and deep understanding of the Indian capital market and ETF segment can be leveraged further through this opportunity. I believe such offerings with DWS can go a long way in attracting global allocations into India.”

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