DWS has launched an ETF offering exposure to India’s government bond market in its local currency.

The Xtrackers India Government Bond UCITS ETF (XIGB) has listed on Deutsche Boerse with a total expense ratio (TER) of 0.38%. 

XIGB tracks the J.P. Morgan India Government Fully Accessible Route (FAR) Bonds index of market cap-weighted Indian sovereign debt denominated in rupees.

Constituents have a minimum issue size of $1bn and must have more than two-and-a-half years remaining maturity to be included.

They must also be available through the FAR scheme, making them eligible for non-residents without investment caps.

The index includes fixed-rate and zero-coupon bonds while excluding bills, floating-rate bonds, capitalisation or amortising bonds, bonds with callable, puttable or convertible features and those not classified under FAR.

XIGB becomes Europe’s second ETF to offer local currency Indian sovereign exposure after the $301m L&G India INR Government Bond UCITS ETF (TIGR) debuted last October, tracking the same index.

DWS’s new entrant arrives within a fortnight of JP Morgan announcing a new round of consultations to bring India within its GBI-EM Global Diversified index after the Reserve Bank of India removed restrictions on foreign investor ownership of Indian debt in March 2020.

The country’s inclusion in the JP Morgan benchmark could drive an estimated $30bn inflows into the market and more than $170bn over the next decade, according to Morgan Stanley.

FTSE Russell has also placed Indian sovereign debt on its watchlist for inclusion which it is set to review in October. 

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