Tabula Investment Management has launched Europe’s first short duration Indian government bond ETF in its local currency.
The Tabula FTSE Indian Government Bond Short Duration UCITS ETF (TIND) has a total expense ratio (TER) of 0.39% and is listed on the London Stock Exchange (LSE).
TIND tracks the FTSE Indian Government Bond FAR Short Duration Capped index, which is market cap weighted, subject to a 25% cap per bond.
The index measures the returns of eight fixed rate local currency bonds specified under Fully Accessible Route (FAR) by the Reserve Bank of India, with duration ranging from 6 months to 5 years.
TIND generates a yield to maturity of of 7.3%, versus 7.4% for the JPM India Government Fully Accessible Route (FAR) Bonds Total Return index, as of 24 November 2023, according to FTSE data.
TIND does have a shorter duration than TIGR and XIGB at 2.3 years versus 6.2 years.
Stefan Garcia, chief commercial officer at Tabula Investment Management, said: “As Indian sovereign bonds are added to global emerging market bond indices in the summer, inflows of over $35bn are expected over the next 18 months.
“Our latest ETF provides a highly efficient, liquid and transparent way to gain exposure to both the India growth story and the wave of expected capital inflows ahead of the country’s EM index inclusion.”
The Reserve Bank of India introduced the Fully Accessible Route (FAR) scheme in March 2020, allowing foreign investors to access Indian sovereign debt without restrictions for the first time.
The inaugural launch of an Indian government bond UCITS ETF came in October 2021 in the form of TIGR, with a total expense ratio (TER) of 0.39%.
Other market competitors include the Xtrackers India Government Bond UCITS ETF (XIGB) – which launched in September 2022 – listed on Deutsche Boerse with a TER of 0.38%.