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LGIM launches Europe’s first local currency India government bond ETF

Legal & General Investment Management (LGIM) has launched the L&G India INR Government Bond UCITS ETF.

The ETF is the first in Europe to provide dedicated exposure to India government bonds, a convenient and transparent way for UK and European investors to access the country’s growing local-currency government bond market, states the company. 

The fund will seek to track the performance of the JP Morgan India Government Fully Accessible Route Bonds Index. The ETF can provide investors with access to a sovereign bond market that has expanded rapidly in recent years and is expected to continue growing due to positive structural trends, exposure to an investment-grade market with a significantly higher yield than developed market treasuries, and a historically attractive risk/return profile, potential diversification benefits from other fixed-income markets given the historically low correlation between local-currency Indian bonds and other emerging and developed-market debt, and a liquid, transparent and convenient way to allocate to a bond market and currency that have historically been difficult for international investors to trade. 

Commenting on the launch, Lee Collins, Head of Index Fixed Income, Legal & General Investment Management, says: “We are delighted to launch the L&G India INR Government Bond UCITS ETF, offering investors exposure to one of the world’s largest government bond markets. Clear progress has been made by the Indian authorities to allow easier access for foreign investors and the country has been on a path to be included across major fixed income indices. We think it is now an appropriate time to offer this product to investors.

“This ETF will enable investors to access Indian government bonds in local currency via a liquid, transparent and regulated UCITS vehicle. India is the second biggest emerging market and the six largest economy in the world, and investors can benefit from accessing a growing sovereign bond and investment-grade market with attractive yields and potential diversification from other fixed income markets.”

James Crossley, Head of UK Retail Sales, Legal & General Investment Management, adds:

“By introducing Europe’s first local currency India Bond ETF, LGIM continues to bring innovative and meaningful solutions to customers, which have been at the heart of the firm’s strong growth in the ETF space over the last three years. This product complements our successful fixed income ETF range. It provides investors with the opportunity to enter a growing market early and offers an exciting option in their search for strong yields.

“The fund aims to give investors easy access to a complex and a highly regulated market, via its UCITS structure, without having to deal with a complex currency or hire a tax adviser or local broker. It can also provide meaningful liquidity, even in times of market stress, by trading in both the primary and secondary markets.”

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