Largest domestic credit rating agency Crisil Research today launched the country's first inflation indexed government securities index (Crisil IIGS Index), which will track the performance of a portfolio of inflation-linked government securities.
Crisil believes the index will provide market participants an appropriate and easily accessible benchmark to measure and analyse the performance of such securities, the agency said in a statement.
That apart, this total return index seeks to capture returns on inflation-linked securities due to coupon accruals and price change, both adjusted for inflation.
The launch comes as part of Crisil's ongoing effort to develop and maintain representative indices for the debt market. In addition to this index, the agency currently maintains 37 indices across bond, gilts, money market, hybrid and commodity segments, which are used by asset managers for benchmarking their products and portfolios.
Agency president Mukesh Agarwal said: "The launch of the index further endorses the agency's status as a pioneer in debt and hybrid indices in the country. This index is expected to serve both as a benchmark and underlying index for investment products such as index funds.
"Crisil will continue to develop indices that help market participants gauge the performance of different asset classes and make investment decisions in an otherwise shallow debt market," he said.
Currently, there is one such security, the 1.44 per cent inflation indexed government stock 2023 (linked to wholesale price index) issued in June 2013. Such securities provide inflation protection on both principal and coupon (interest) payments.
It may be noted that the agency already provides daily valuation of government securities, including mutual funds for determination of net asset value of funds, to investors.
Senior director for capital markets Sandeep Sabharwal said, "We believe the Crisil IIGS Index will meet the need for an appropriate benchmark index for these funds." He further noted that since its launch in 2013, the inflation-linked government security has gained some popularity in the mutual funds space. Two inflation-linked funds have already been launched and a few are in the pipeline.
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