DWS launches Xtrackers India Government Bond UCITS ETF in collaboration with Nippon Life India Asset Management
- ETF provides access to emerging Market sovereign debt excluded from flagship indices
- Nippon Life India Asset Management brings strong local market expertise
- Investment-grade rating and a duration of around six years
DWS is providing investors with access to the Indian rupee-denominated Indian government bond market with the launch of the Xtrackers India Government Bond UCITS ETF 1C. The ETF listed on the London Stock Exchange today and on the Deutsche Börse yesterday.
Due to limited liquidity and accessibility, Indian government bonds are currently not included in flagship bond indices such as the Bloomberg Global-Aggregate index or the J.P. Morgan Government Bond – Emerging Markets Global Diversified index[1].
The economy of the world's second most populous country is growing strongly, with real Gross Domestic Product (GDP) increasing by 8.7 percent in 2021, and the International Monetary Fund forecasting a rise of 7.4 percent in 2022 and 6.1 percent in 2023[2]. The Debt-to-GDP level has been relatively stable at around 70% for the last decade[3] , while the largest democracy in the world has never defaulted on its debt. In addition, being a net importer of energy, the Indian rupee is negatively correlated to energy prices, meaning a potentially higher resilience of Indian government bond exchange-rate adjusted returns during economic downturns.
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 sovereign debt markets of Canada and Spain. In the emerging markets local currency space, it is second only to China’s treasury market. The Xtrackers India Government Bond UCITS ETF has a duration of around six years and an average credit rating of ‘BBB-‘ as of August 2022. The annual all-in fee (total expense ratio) is 0.38%.
The new ETF aims to physically replicate the J.P. Morgan India Government Fully Accessible Route (FAR) Bond index. This 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 ceiling. The instruments comprise FAR-eligible fixed-rate and zero-coupon bonds.
Nippon Life India Asset Management (Singapore) Pte. Ltd. was appointed as sub portfolio manager, providing portfolio management services for the Xtrackers India Government Bond UCITS ETF 1C.
“DWS is continuously developing its range of ETFs in order to meet the ever-evolving needs of investors. With this new product we are giving our clients access to the attractive Indian bond market. Nippon Life India Asset Management brings its deep knowledge of the Indian fixed income market,” said Michael Mohr, Head of Product Specialists, Passive, at DWS.
“We are delighted to provide access to India’s growth story to DWS’s investor base through this differentiated product offering. Our 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 offerings 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.
Product Table
| Fund Name | Share Class | ISIN | Bloomberg Ticker | Total Expense Ratio | Index | Distribution Policy | Fund Currency |
|---|---|---|---|---|---|---|---|
| Xtrackers India Government Bond UCITS ETF 1C | 1C | IE000QVYFUT7 | XIGB | 0.38 percent | J.P. Morgan India Government FAR Bonds | Capitalising | USD |
About DWS Group
DWS Group (DWS) is one of the world's leading asset managers with EUR 833bn of assets under management (as of 30 June 2022). Building on more than 60 years of experience, it has a reputation for excellence in Germany, Europe, the Americas and Asia. DWS is recognised by clients globally as a trusted source for integrated investment solutions, stability and innovation across a full spectrum of investment disciplines.
We offer individuals and institutions access to our strong investment capabilities across all major asset classes and solutions aligned to growth trends. Our diverse expertise in Active, Passive and Alternatives asset management – as well as our deep environmental, social and governance focus – complement each other when creating targeted solutions for our clients. Our expertise and on-the-ground-knowledge of our economists, research analysts and investment professionals are brought together in one consistent global Chief Investment Office (CIO View), which guides our investment approach strategically.
DWS wants to innovate and shape the future of investing: with approximately 3,600 employees in offices all over the world, we are local while being one global team. We are investors – entrusted to build the best foundation for our clients’ future.
Key risks
- Investors should note that the Xtrackers UCITS ETFs and ETCs are not capital protected or guaranteed and investors should be prepared and able to sustain losses of the capital invested up to a total loss.
- Shares in the Xtrackers UCITS ETFs which are purchased on the secondary market cannot usually be sold directly back to the relevant fund. Investors must purchase and redeem such shares on the secondary market with the assistance of an intermediary (e.g. a market maker or a stock broker) and may incur fees for doing so (as further described in the applicable prospectus). In addition, investors may pay more than the current net asset value of a share in a Xtrackers UCITS ETF when buying shares on the secondary market, and may receive less than the current net asset value when selling such shares on the secondary market.
- Investments in funds involve numerous risks including, among others, general market risks, credit risks, foreign exchange risks, interest rate risks and liquidity risks. The value of an investment in a Xtrackers UCITS ETF may go down as well as up and investors may not get back the full amount of their original investment.
- Investments in ETC securities will not accrue any interest and performance is subject to the deduction of the product fee.
- Pricing of the ETC securities on the secondary market may be at a significant discount or premium compared to the Value per ETC Security (intrinsic value) published by the Issuer. Investments in Xtrackers ETCs involve numerous risks including but not limited to, general market risks relating to the relevant commodities, exchange rate risks, interest rate risks, inflationary risks, liquidity risks, and legal and regulatory risks.
- Movements in exchange rates can impact the value of your investment. If the currency of your country of residence is different from the currency in which the underlying investments of the fund are made, the value of your investment may increase or decrease subject to movements in exchange rates.
- For a full description of risk factors, please refer to the relevant prospectus.
Important Notice
This press release has been issued in the UK and approved by DWS Investments UK Limited. DWS Investments UK Limited is authorised and regulated by the Financial Conduct Authority. Any reference to “DWS” shall, unless otherwise required by the context, be understood as a reference to DWS Investments UK Limited including any of its parent companies, any of its or its parents affiliates or subsidiaries and, as the case may be, any investment companies promoted or managed by any of those entities.
Past performance is not a guide for future returns.
Xtrackers UCITS ETFs are all ETFs of one of the following platforms: Xtrackers, Xtrackers II or Xtrackers (IE) plc.
Xtrackers, Xtrackers II and Xtrackers (IE) plc are undertakings for collective investment in transferable securities (UCITS) in accordance with the applicable laws and regulations and set up as open-ended investment companies with variable capital and segregated liability between their respective compartments.
Xtrackers and Xtrackers II are incorporated in the Grand Duchy of Luxembourg, are registered with the Luxembourg Trade and Companies’ Register under number B-119.899 (Xtrackers) and B-124.284 (Xtrackers II) respectively and have their registered office at 49, avenue J.F. Kennedy, L-1855 Luxembourg. Xtrackers (IE) plc is incorporated in Ireland with registered number 393802 and has its registered office at 78 Sir John Rogerson’s Quay, Dublin 2, Ireland. DWS Investment S.A. acts as the management company of Xtrackers, Xtrackers II and Xtrackers (IE) plc.
This information is intended for informational purposes only and does not constitute investment advice, recommendation, an offer or solicitation. Any investment decision in relation to an Xtrackers ETF should be based solely on the latest version of the prospectus, the audited annual and, if more recent, un-audited semi-annual reports and the Key Investor Information Document (KIID), all of which are available in English upon request or on www.Xtrackers.com. In the case of any inconsistency with the prospectus, the latest version of the prospectus shall prevail.
© DWS Investments UK Limited 2022.