Industry Updates

FTSE Russell defers India inclusion in emerging market bond index

Contrasts recent inclusions from Bloomberg and JP Morgan

Lauren Gibbons

a large white building with domes and towers with Taj Mahal in the background

FTSE Russell will defer the inclusion of India in its emerging markets government bond index citing taxation, regulation and settlement concerns.

In an announcement, the index provider said the country would not be included due to its “inflexible length of the settlement cycle and the tax clearance process”.

The move contrasts other major index providers such as JP Morgan and Bloomberg. JP Morgan added Indian government bonds with a combined value of $330bn to the JP Morgan GBI-EM Global Diversified index last September.

More recently, Bloomberg announced the inclusion of Indian foreign accessible route (FAR) bonds in the Bloomberg Emerging Market (EM) Local Currency Government index in March.

FTSE Russell said it “welcomes feedback from an expanding cohort of international investors entering the Indian government bond market on the practicalities of their investment experience”.

India had been added to the fixed income country classification watch list for consideration for inclusion in the index.

David Sol, global head of policy and governance at FTSE Russell, said: “Through our proactive programme of engagement and market analysis, FTSE Russell equity and fixed income indices remain fit for purpose and reflect both the opportunities and challenges faced by investors.”

Several ETF issuers currently offer exposure to Indian government bonds.

BlackRock became the latest to enter the market with the launch of the iShares India INR Govt Bond UCITS ETF (INGB), joining Legal & General Investment Management (LGIM), DWS, Tabula Investment Management and UTI Funds.

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