Investing in India through ETFs
As India becomes the new rising star in Asia investors are actively seeking new ways to gain exposure in the country. Optimism in India is at an all-time high as the Modi government is making sure it plays its cards in a way that attracts foreign inflows. As per a Bloomberg report, the value of Indian stocks touched $1.76 trillion on March 2, a nine-year high.
Major India focused ETFs have returned 20% year to date and experts expect further upside.
ETFs to consider
The iShares MSCI India ETF (INDA) is the largest U.S. based ETF focussed on India This ETF that has $4.8 billion under management invests in a basket of 78 securities and seeks to track the MSCI India Total Return Index. This ETF’s portfolio is highly concentrated in two stocks — Infosys (INFY) and Housing Development Finance (HDB). These two stocks make up nearly 20% of its holdings. The INDA ETF is slightly weighted towards the information technology sector. The top five sectors it invests in are financials, consumer staples, health care and consumer discretionary. Year to date, shares of the INDA ETF have surged 18.5%.
The iShares India 50 ETF (INDY) tracks the CNX Nifty Index and invests in 53 large cap Indian stocks. With assets under management of $850 million, it is much smaller than the INDA ETF. This ETF has a well-diversified and balanced portfolio with none of the stock comprising greater than 7% of its assets. Further, the INDY ETF invests in the financial, information technology, consumer discretionary, and energy sectors. Year to date, this ETF has returned 19.5%.
The Power Shares India Portfolio (PIN) invests in a basket of 50 large cap stocks listed on the two largest Indian stock exchanges – the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE). Its holdings are concentrated in two stocks – Reliance (RELIANCE) and Infosys (INFY) while other stocks form less than 5%. The energy and information technology sectors form a larger part of the PIN fund followed by financials and healthcare. Year to date, shares of this ETF have returned 18.8%.