India Set to Debut Its First Bond ETF Offering

It looks like the government of India is set to debut its first bond exchange-traded fund (ETF), which will be launched by investment firm Edelweiss Asset Management. The ETF will come in two flavors—one with a 3-year note and the other a 10.

“Called the Bharat Bond ETF, Edelweiss Asset Management will launch it soon, after nearly two years of deliberation with the government of India,” a Money Control article reported. “The former finance minister Arun Jaitley had made announcements relating to bond ETFs in his Budget speech of 2018. Now, here is a low-down on the structure of the product and some pointers for investors to benefit from.”

“The Bharat Bond ETF will have a definite maturity period, just like the way a closed-end mutual fund scheme has. Of course, the ETF units will be listed on the stock exchanges,” the report added. “In her first and exclusive chat with Moneycontrol, Radhika Gupta, the chief executive officer of Edelweiss AMC said that the bond ETF will have two variants – one scheme maturing after three years (2023) and another after 10 years (2030). Only the growth option would be available to investors. There would be no dividend option in these schemes.”

The ETF strategy will come with a definite maturity date as opposed to an open-ended strategy that invests in bonds of various maturities—short-term debt issues, long-term, ultra-short, and so forth. Edelweiss said the scheme with the definitive maturity date suited Indian investors best.

“Indian investors, who typically invest in fixed-income securities, need to know, even if indicatively, as to how much returns they can make,” Radhika said.

Other India-Focused ETFs to Consider

Investors looking broad-based exposure to India can use the iShares MSCI India ETF (CBOE: INDA). INDA seeks to track the investment results of the MSCI India Index composed of Indian equities, which measures the performance of equity securities of companies whose market capitalization, as calculated by the index provider, represents the top 85% of companies in the Indian securities market.

Short-term traders looking for leverage can use the Direxion Daily MSCI India Bull 3x ETF (NYSEArca: INDL). INDL seeks daily investment results equal to 300% of the daily performance of the MSCI India Index, which is designed to measure the performance of the large- and mid-capitalization segments of the Indian equity market, covering approximately 85% of the Indian equity universe.

For more information on India’s markets, visit our India category.