AMFI hails JP Morgan’s decision to include Indian G-Sec in the benchmark emerging market index

The Association of Mutual Funds of India (AMFI) on Friday welcomed the decision of global financial major JP Morgan to include government bonds in its benchmark Emerging Market Index from next year, saying it will result in more demand for government securities. It will help bring over USD 30 billion into government bonds or government securities (G-Sec), AMFI Chief Executive NS Venkatesh said.

“We welcome the decision. This will increase the demand for government bonds resulting in the yields coming down. The forex inflow of over USD 30 billion will result in strengthening of Indian Rupee,” he told PTI.

The inclusion of IGBs will be staggered over a 10-month period from June 28, 2024, to March 31, 2025, with a one per cent increment on its index weight each month.

“India’s weight is expected to reach the maximum weight threshold of 10 per cent in the GBI-EM Global Diversified, and approximately 8.7 per cent in the GBI-EM Global index,” JP Morgan said in a statement.

Gilt funds are debt funds which only invest in bonds and fixed interest-bearing securities issued by the state and central governments.

The asset under management of gilt funds and gilt funds with 10-year constant duration is nearly Rs 27,500 crore as of August, according to AMFI data. The inclusion of IGBs in the JP Morgan Emerging Market index is a significant development for the Indian bond market. It will make Indian government bonds more attractive to foreign investors.

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