India has the second-fastest growing GDP in the world behind
China. Last week Morgan Stanley said India might overtake China as
the fastest growing economy by 2015, and could reach a growth rate
of 9.5 percent between 2011 and 2015.
The South Asian country is expected to double infrastructure and
add six times more workers than China over the next 5 years. Morgan
Stanley economist Chetan Ahya said,
"...there will be a clear divergence of growth rates between
the two countries
". He projects India will add 136 million workers by 2020, compared
to China's 23 million workers.
Manmohan Singh, the Prime Minister of India, says the government
plans to double its spending on ports, roads, and power plants
between 2012 and 2017. This will most likely lead to an increase in
workers and salaries, which will help boost growth in the
***With India's growth rate accelerating so fast, it's worth
looking at small cap investment opportunities in the country. One
of the easiest ways to gain exposure is through an ETF, and now
there's one that offers exposure to small cap stocks in this
Emerging Global Shares Index Small Cap ETF (
was recently launched in July. It invests in 75 publically traded
companies in India with market caps between $100 million and $2
billion. This is a great play that focuses more on consumer demand
for domestic products rather than exports to already developed
Regarding the ETF, Richard Kang, CIO and director of research at
Emerging Global Advisors, says, "
There are only four Indian ETFs out there, we are the fifth one
and we are the only one that focuses on small-caps
Existing Indian ETFs including
iPath MSCI India Index ETN (
Powershares India (
iShares S&P India Nifty 50 Index (Nasdaq:
all target large-cap stocks in India. But SCIN is the only one that
gives investors pure exposure to high-growth small cap stocks.
The chart below shows the ETF's strong performance over the last
month and a half. Since its inception date on July 7 SCIN it has
returned 8.4 percent.
This could be a great place to put your money if you're looking
to get some broad-based international exposure, but still stay
within the small-cap investing sphere. With bond returns so low,
and uncertainty rampant in many sectors of the U.S. economy,
emerging market small caps could continue to outperform developed
The ETF has an expense ratio of 0.85 percent, which is slightly
higher than most ETFs. It is heavily invested in commercial banks,
IT services, and software - check out the weightings of the top
five sectors below.
This second chart further breaks down its allocation of funds.
It shows the company's top ten holdings as of June 30.
I like this ETF and will continue to follow its performance in
coming weeks. It's a great option for people who want to invest in
small-cap companies in other areas around the world - but don't
want to have to pick single stocks or deal with buying on a foreign
For those of you who love ETF investing, my team just put
together a report which includes three of the best commodity ETF's
out there. These guys aren't small cap ETFs, but they have been
strong performers and are great if you're an ETF investor in larger
market cap companies. You can get this report