NSE group firm India Index Services & Products Ltd (IISL) on Friday launched a new Nifty index to the rack performance of a portfolio of state development loans (SDLs) securities with residual maturity of about 10 years.
The index captures the total return, including price return and coupon return, on the underlying SDL portfolio.
As per IISL the index will cater to the benchmarking needs of asset managers for their investments in SDLs and would also be available for licensing for launch of structured products and passive financial products like exchange traded funds (ETFs) and index funds.
“The NIFTY 10 Year SDL index, with its unique construction methodology, aims to represent this evolving segment of the Indian fixed income securities market,” IISL CEO Mukesh Agarwal said in a statement.
According to IISL, with increasing level of state borrowings, issuances of SDLs have almost doubled from Rs 1.97 trillion in 2013-14 to Rs 3.88 trillion in 2016-17.
The 10 year continues to be the most popular maturity segment with about 96 percent share of SDL primary issuance volume, it said in a release.
Besides, within mutual funds, gilt funds investment in SDLs, as a per cent of their fund AUM, has increased from 6 percent to 15 percent in the previous 3 financial years.
The base date for the index is September 3, 2001 and base value is 1,000 and the list of 14 states in the index would be reviewed annually.