life in financial markets: coming soon -- a global equity-based product on the NSE?

Today, if an Indian small individual investor, such as me, wants to invest in global ETFs and securities I hardly have much option other than go through icicidirect.com (which is the only one that does not demand a minimum Rs 5 lakh worth of initial global investments) and 3-4 others like Kotak Securities, India Infoline etc. Even with them one has to convert Rs into Dollars and transmit the same to the international dollar account before executing trades on NYSE or any other exchange. The whole process is very cumbersome, time consuming and costly.

Shouldn't, therefore, an efficient stock exchange such as the National Stock Exchange of India (NSE) list on itself ETFs (exchange traded funds) and/or equity-based securities/funds that are based on indices or securities from outside India (and run/managed by international ETF providers) or that are already listed on exchanges elsewhere outside India? This will make it possible for an investor like to me to buy or sell the global ETF/security right here in India and settle the trade on NSE in rupees. Its unfortunate but the NSE has been delayed in doing something about it despite having NYSE-Euronext as one of its shareholders (holding 5% stake).

Well, a little bird tells me that the NSE, indeed, is in the final stages of launching such a global ETF/product and an announcement is likely to be made within a week or month. As an investor, I hope I am not disappointed by the choice of the global ETF that NSE initially brings to India. I would also prefer to see a robust range of global products listed and traded on the NSE. I am particularly very bullish on alternative energy ETFs listed and traded on stock exchanges in US, UK, Singapore etc.

Lets see what NSE gets here.


UPDATE (11 MARCH 2010): The global product has finally come. Read my 11 March 2010 blogpost

life in financial markets: invest in green ETFs

The next 5-30 years is going to be the best years for green energy companies and if you are an investor in global markets having access to global exchange-traded-funds listed on exchanges such as NYSE-Euronext and London Stock Exchange then I would strongly encourage you to go out and there and buy green or alternate energy ETFs.

You could invest once every month in one or more of these ETFs. After accumulating about 10-15 such ETFs you could add to these ETFs plus occasionally keep picking up other or new ETFs in the field of green energy.

I know of at least two such ETFs that can be immediately invested in. The first is Van Eck Global Alternate Energy that is listed on NYSE-Arca and designed to mimick the Global Ardour Index. The second one is ETFS DAXglobal Alternative Energy Fund that is listed on London Stock Exchange and designed to mimick the Daxglobal Alternative Energy Index.

Even investors in India should invest in these rather than putting their money in environmentally and socially unfriendly companies such as Reliance Industries, other Reliance companies, DLF, Unitech, pharma companies, Sterlite, Sesa Goa and pesticide-manufacturing companies.