UBS Asset Management has announced the launch of two ETFs designed to provide easy access to the Indian equity market.
The firm writes that this dual passive offering enables investors to align their allocation according to their investment objectives and ESG preferences.
The UBS MSCI India SF UCITS ETF offers broad exposure to large and mid-cap Indian companies by tracking the MSCI India Index. With 160 constituents, the index represents approximately 85 per cent of the Indian equity universe. While its value may fluctuate depending on the underlying index, the fund is swap-based which can be beneficial as synthetic ETFs are not currently subject to Indian capital gains tax.
The UBS MSCI India Universal UCITS ETF tracks the MSCI India Universal Low Carbon Select 5 per cent Issuer Capped Index, which increases exposure to companies with robust and improving ESG profiles, while systematically excluding those that do not meet established ESG and climate-related criteria. It uses physical replication, directly holding Indian equities, to ensure transparency and consistency between the fund’s ESG profile and its benchmark.
This fund, which is aligned to Article 8 under SFDR, is the latest addition to our existing suite of ESG Universal ETFs, which includes ACWI, Australia, Canada, China, EMU, Japan, and USA.
Why India now?
· India is projected to become the third largest economy globally by 2027.
· It is already the fourth largest economy, with a GDP of over USD 4 trillion.
· It benefits from a proportionally bigger working-age population and an annual growth of 6-8 per cent.
· India’s equity market is the fifth largest worldwide, with a total market cap over USD 4 trillion.
· This market is also very liquid – more than 170 stocks each have a market cap over USD 5bn.
Andrew Walsh, Head ETF & Index Fund Sales UK & Ireland, UBS Asset Management says: “There’s been a surge of interest in Indian equities lately – UCITS assets in this market have more than doubled in the past two years and are currently above the USD 10 billion milestone. So, we’re delighted we can offer our clients a choice of two ETFs in this space: the synthetic UBS MSCI India SF, with its tax benefits; and the ESG-focused UBS MSCI India Universal.”
The ETFs are being listed on the SIX Swiss, XETRA and Borsa Italiana stock exchanges in November.
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