Indians invest a substantial portion of their savings in fixed income instruments such as small savings schemes, fixed deposits, bonds and various types of fixed income mutual funds. However, one product which is gaining popularity in the developed world, which has been till now missing in India, is Bond ETFs.
Globally, Bond ETFs have have reported a healthy growth over the last decade. As per the latest data from Bloomberg, the size of Global Bond ETFs now accounts for over $1 trillion AUM out of total $4 trillion AUM across various ETFs. In India, retail participation in corporate bond market is shallow due to structural challenges like poor accessibility, lack of transparency and awareness. Bond ETFs can tide over these challenges and can play an important role in increasing retail investor participation in corporate bond market.
