LGIM launches Indian bonds ETF
LGIM has listed an Indian bond ETF that aims to make the most of the “opening up” of India’s capital markets under Prime Minister Modi.
L&G India INR Government Bond UCITS ETF (TIGR) will invest in Indian governments bonds denominated in rupees. Indian government bonds are currently BBB- rated, making it one of the last EM countries with a stable investment grade bond rating.
TIGR is linked to the JP Morgan India Government Fully Accessible Route Bonds Index. It provides exposure to rupee-denominated Indian government bonds that were previous unavailable to those living outside of India. The index screens funds for liquidity, which is often a problem in local currency Asian bonds.
LGIM believes the fund will be of greatest interest to retail investors, who are searching for higher yields.
The index yield is 6.2% at the time of writing, while the effective duration is 6.5 years. The fee is 0.39%.
Bernie’s commentary – covid bounce and LGIM’s website
A couple of things to say here. The first of which is I really like this kind of bond ETF that targets parts of Asia, where yields are still higher. As India was hard-hit by covid, its government bond yields shot up. But as the country turns the corner now could be the time to buy.
However, there are some things to watch out for. The first is currency risk. As this fund is unhedged, currency fluctuations could hit it hard. To me at least, the rupee seems to be in a state of structural decline against the USD. Just look at the long term price chart.
The other is LGIM’s website. This may sound like a silly thing to complain about, but I think LGIM could maybe add more data to TIGR’s website. Important portfolio data like duration, yield to maturity, credit ratings aren’t anywhere obvious on the fund’s website. This puts it in contrast to most bond ETFs. I had to get the above by doing some digging, LGIM has some interesting ETFs these days they should make their website slightly friendlier.
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