courage

http://www.livemint.com/Money/jUUzGgkwkauveigp28EgkM/Indian-fixed-income-ETF-for-global-investors-launched.html

Zyfin Holdings listed its Indian fixed income exchange-traded fund (ETF) on the Deutsche Borse and the London Stock Exchange. This ETF will give overseas investors access to Indian corporate bonds.

According to a statement issued by the company, this is the first time that overseas investors will be able to invest in a basket of six Indian public sector company bonds. The fund, named LAM Sun Global ZyFin India Sovereign Enterprise Bond UCITS ETF, is designed to track the performance of ZyFin India Sovereign Owned Enterprise Bond Index. The underlying index comprises of the six public sector company bonds in equal proportion with a weighted average yield of around 8.2% and average maturity of 8.97 years. The underlying bonds are listed and traded on Indian stock exchanges.

While there is no fixed target, the endeavour is to collect $400-500 million over the next six months, 

This isn’t a fund for the opportunistic investor; the fund’s key investor information document also advises that it is not suited for investors who plan to withdraw their money within three years. “Such a product is best placed with buy-and-hold investors rather than hedge funds who move in and out quickly,” said Aashish Somaiyaa, managing director and chief executive officer, Motilal Oswal Asset Management Co. Ltd.

Another aspect to be considered is the currency risk since the underlying asset is priced in rupees and the investment will be priced in foreign currency.

“Given that global investors have access to Indian foreign currency bonds issued by large Indian banks—which currently yield around 4-4.5%—it remains to be seen if they will want to bear the currency risk that comes with such a product,” said Nikhil Johri, founder and chief investment officer, Trivantage Capital Management India Pvt. Ltd, a Mumbai-based portfolio management company.