Kotak allows international access to India Sensex ETF

Kotak Mahindra has launched a feeder fund allowing international investors to access the India-domiciled Kotak Sensex ETF.

The ETF is listed on the Bombay Stock Exchange (BSE) and provides returns based on the BSE Sensex index.

The feeder fund is denominated in US dollars, and is domiciled in Mauritius. It shall be predominantly invested in units of the underlying domestic fund.

Kotak Mahindra director and CEO Shyam Kumar says: "The Sensex, the flagship index of the Indian capital markets comprising 30 large and liquid companies in prominent sectors of the fast-growing Indian economy, has given 77.81% returns year to date."

He says the Sensex represents around 44% of the total market capitalisation of the BSE, which in turn represents over 99% of the total listed market capitalisation of the country, as of November.

He adds: "This feeder fund thus provides an effective solution for long-term investors seeking to play the India growth story at a significantly lower cost compared to actively managed funds."

The feeder fund also provides exposure to certain stocks in the Sensex that may not otherwise be accessible to foreign investors, due to limits on foreign institutional investor ownership. The feeder achieves this by investing in the onshore fund, which is not subject to such limits.

Kotak highlights investments in India are subject to various risks, as with other emerging markets, including geopolitical issues, potential loss of capital, variable liquidity and exchange rate risks.