World’s first Indian fixed income ETF begins trading on Xetra

Nov 18th, 2015 | By | Category: Fixed Income

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ZyFin, a Singapore-headquartered asset manager with advisory operations based in India, has listed the world’s first Indian fixed income exchange-traded fund, the LAM Sun Global ZyFin India Sovereign Enterprise Bond UCITS ETF (GNT1 GR), on Xetra and the Börse Frankfurt.

World's first Indian fixed income ETF begins trading on Xetra

The ETF from ZyFin invests in the bonds of India’s Sovereign Owned Enterprises, which play a major role in India’s infrastructure development.

The fund aims to track the performance of the ZyFin India Sovereign Owned Enterprise Bond Index and will offer investors exposure to bonds from companies of national interest that are majority-owned by the Government of India, so-called Sovereign Owned Enterprises (SOEs). According to ZyFin, SOEs play a major role in India’s infrastructure development and include the likes of the Indian Railways, Power Finance Corporation and Rural Electrification Corporation of India.

“Today, with the world’s first Indian fixed income ETF, we are launching our product line of innovative ETFs intended to give investors cost-effective and transparent access to investment opportunities in emerging markets. Building on our many years of macro analytical research expertise in this field, we see our task as offering investors around the world attractive investment opportunities,” said Sanjay Sachdev, Chairman and co-founder of ZyFin.

Michael Krogmann, Head of Cash Market Development at Deutsche Börse, added: “We are pleased to welcome ZyFin as a new ETF issuer on Xetra. The primary listing of the world’s first ETF on Indian corporate bonds enhances our product offering in the segment with efficient and cost-effective access to an asset class that was previously hard to access.”

The Fund will be distributed and traded by Sun Global Investments, a London-based wealth management firm. Mihir Kapadia, CEO of Sun Global Investments, said: “The macroeconomic fundamentals for India are very attractive and underlying yields in Indian bonds are high. This new ETF gives global investors access to high quality bonds at attractive yields at a time when developed bond market yields are at very low levels and in fact negative in Germany or Switzerland. We hope investors in the ETF will hold for the medium- to long-term but for those who need to trade, the liquidity offered on Xetra and the Börse Frankfurt venue will allow them to buy and sell easily.”

The index draws its constituents from the highest credit rated SOE issues in its eligible universe. Eligible bonds must be rated AAA or equivalent and components are selected based on aggregate traded value in the last calendar month. The index will have six constituents, each receiving an equal weight, with no more than one security from a single issuer eligible for the index at any one time.

The ETF will also be listed on the London Stock Exchange on 19 November 2015. The estimated total expense ratio is 0.79% per annum.

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