Nippon Life India Asset Management and DWS join hands to launch a European-listed Indian Government Bond ETF | The Financial Express

Nippon Life India Asset Management and DWS join hands to launch a European-listed Indian Government Bond ETF

The market size for securities issued by the Indian government is more than USD 1 trillion as of August 2022.

Nippon Life India Asset Management and DWS join hands to launch a European-listed Indian Government Bond ETF
Nippon Life India Asset Management has joined hands with DWS to launch a European-listed Indian Government Bond ETF. Representative image

Nippon Life India Asset Management (Singapore) Pte. Ltd (a wholly owned subsidiary of Nippon Life India Asset Management Limited) has collaborated with DWS to provide portfolio management and investment advisory services to the European-listed Indian Government Bond ETF.

“DWS is continuously developing its range of ETFs in order to meet the ever-evolving needs of investors. Through this collaboration, we give our clients access to the attractive Indian bond market. Nippon Life India Asset Management brings in its deep knowledge of the Indian Fixed-Income market”, said Michael Mohr, Head of Product Specialists Passive at DWS.

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“We are delighted to provide access to India’s growth story to DWS’ investor base through this association. 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 collaboration with DWS can go a long way in attracting global allocations into India”, said Sundeep Sikka, Executive Director and CEO at Nippon Life India Asset Management Limited.

The economy of the world’s second most populous country is growing strongly, with real Gross Domestic Product (GDP) increasing by 8.7 per cent in 2021, and the International Monetary Fund forecasting a rise of ~7 to 8 per cent in 2022 and ~6 to 7 per cent in 2023. 

Debt to GDP level has been relatively stable at around 70 per cent over the previous decade and the largest democracy in the world has never defaulted in the past. In addition, being net importer of energy, the Indian rupee is negatively correlated to energy prices, meaning a potentially higher resilience of Indian government bond’s exchange-rate adjusted returns, during economic downturns.

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The market size for securities issued by the Indian government is more than USD 1 trillion as of August 2022. This ranks it between the corresponding markets in Canada and Spain, in the emerging markets local currency space it is only second to China’s treasury market.

Indian rupee-denominated government bonds issued by the Indian government for reasons of limited liquidity and accessibility are not included for the time being in flagship indices such as Bloomberg Global-Aggregate or J.P. Morgan Government Bond – Emerging Markets Global Diversified.

The relevant index (J.P. Morgan India Government Fully Accessible Route (FAR) Bond index) aims to track the performance of fixed-rate Indian rupee-denominated Indian government bonds that have been made eligible for investment 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 ceilings. The instruments comprise FAR-eligible fixed-rate and zero-coupon bonds.

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