ZyFin launches Europe’s first physical Indian equity ETF

Sep 22nd, 2016 | By | Category: Equities

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ZyFin has launched Europe’s first physically replicated Indian equity exchange-traded fund: the LAM ZyFin MSCI India UCITS ETF. The ETF tracks the MSCI India 10/40 Index, denominated in US dollars, providing access to the performance of the large- and mid-cap segments of the Indian equity market.

Zyfin launches Europe’s first physically-replicating Indian equity ETF

The LAM ZyFin MSCI India UCITS ETF is the first European-listed ETF to provide direct access to Indian equities.

Sanjay Sachdev, Executive Chairman at Singapore-headquartered ZyFin, commented: “We are excited to be launching Europe’s first physically backed Indian equity ETF, a product which fits perfectly with our ethos of offering investors cost-effective and transparent access to investment opportunities in emerging markets.

“Many advisers and wealth managers shy away from using synthetic products, so the LAM ZyFin MSCI India UCITS ETF is an ideal solution for offering investors access to attractive growth opportunities in India. With economic growth for the current and forthcoming year projected at 7.4%, a huge workforce and growing middle class the investment case for India is compelling.”

Derek Fulton, CEO of First Trust Global Portfolios, ZyFin’s ETF distribution partner in London, added: “As the London-based ETF distributor we are very pleased to offer European investors access to the vibrant Indian equity market with Zyfin’s innovative investment solution. We believe the MSCI India 10/40 Index offers a truly diversified representation of India’s economic growth story, which investors can now access in a cost effective and transparent manner.”

Currently comprising 74 constituents, the MSCI India 10/40 Index covers approximately 85% of the free float-adjusted market capitalisation in India. To ensure diversity and UCITS compliant, the index caps the weight of any single stock to 10% and caps the sum of the weights of all stocks above 5% to a maximum of 40% of the final portfolio. The index is rebalanced on a quarterly schedule so as to reduce tracking error relative to the parent MSCI India Index.

As of 31 August 2016, the index was up 9.8% year-to-date. It has returned 12.4% per annum over the past five years and experienced an annualized standard deviation of 15.3% over the same period.

The index is relatively diversified across the sector, with the largest exposure being financials (19.1%), information technology (16.2%), consumer discretionary (15.0%), health care (10.9%), consumer staples (10.5%) and energy (9.1%). The largest individual constituents are Housing Development Finance Corp (9.5%), Infosys (7.0%), Reliance Industries (6.2%), Tata Consultancy (5.4%) and ITC (4.0%).

The median market cap of the constituents is 181bn Indian rupees (equivalent to $2.7bn).

In presenting the investment case for India, Zyfin notes that the Indian economy has enjoyed average real GDP growth year-on-year of 6.4% for the last 33 years and, according to the IMF, is projected to be the fastest growing major economy for the next two years.

ZyFin believes there is the potential for accelerated growth in India’s domestically orientated economy as income levels per capita rise while central bank reforms, political stability, lower rates and macro improvements will reflect on corporate earnings.

The fund has been launched on the London Stock Exchange in US dollars (Ticker: INDM) and pound sterling (Ticker: MIND), as well as on Deutsche Börse’s Xetra exchange in euros (Ticker: INDM). It has a total expense ratio of 0.89%.

ZyFin is making a name for itself in Europe as a pioneer of emerging markets ETFs. The firm launched the world’s first Indian fixed income ETF on the London Stock Exchange in November 2015 and more recently unveiled the first UCITS-compliant Turkish sovereign bond ETF in London in June 2016.

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