Sovereign debt crisis in Europe and slow economic growth in
the U.S. were some of the reasons that caused massive capital
outflows from the Indian capital markets and imposed huge
downward pressure on the Indian Rupee (INR) and slowdown in the
Manufacturing and agricultural bottlenecks and lack of
proactive measures by the government and the central bank
(Reserve Bank of India) were the main reasons behind the economy
reporting a mere 5.3% GDP growth for the second quarter of fiscal
Some of the positives for investing in India are low levels of
correlations of Indian capital markets with the developed markets
and attractive valuations.
Recent economic policies will make India an attractive
destination for foreign investments once the global economic
These policies include 1) diesel subsidy cut, 2) foreign
direct investment (FDI) guidelines relaxed, and 3) tax on foreign
borrowings by Indian corporate reduced (see
India ETFs: Getting Back On Track?
Investors looking to tap this economy in basket form can
invest in WisdomTree India
Earnings fund (EPI) which is a #2 Zacks ETF Rank (Buy) fund.
We expect it to outperform its peers over the next year. The
product could be worth a closer look by investors seeking
exposure to this economy (see
Zacks Top Ranked India ETF in Focus: INDY
About the Zacks ETF Rank
The Zacks ETF Rank provides a recommendation for the ETF in
the context of our outlook for the underlying industry, sector,
style box, or asset class. Our proprietary methodology also takes
into account the risk preferences of investors.
are ranked on a scale of 1 (Strong Buy) to 5 (Strong Sell) while
they also receive one of three risk ratings, namely Low, Medium,
or High (see more in the
The aim of our models is to select the best ETFs within each
risk category. We assign each ETF one of five ranks within each
risk bucket. Thus, the Zacks Rank reflects the expected return of
an ETF relative to other products with a similar level of
For investors seeking to apply this methodology to their
portfolio in the Indian market, we have taken a closer look at
the top ranked EPI below:
WisdomTree India Earnings Fund (
EPI is designed to provide a broad exposure to the Indian
equity market with a focus on resembling the risk-return
characteristics of total market equities. This ETF is appropriate
for investors seeking a broad exposure to Indian equity markets
with a focus on large cap equities with a long-term view. At 83
basis points, the expense ratio for the ETF stands pretty high.
Like any other emerging market, investing in Indian equities
requires a daunting appetite for risk.
The fund offers ample liquidity, trading in daily volumes of
more than 2.8 million shares and has assets under management of
$1.15 billion. The fund appears to be highly concentrated in the
top 10 stocks where it has invested 40.4% of its assets (see
Does Your Portfolio Need An India ETF?
From a sector perspective, the ETF relies heavily on its top
sectors. Financials, Energy, Information Technology, Materials
and Industrials are the sectors with double-digit exposure.
Healthcare, Consumer Staples and Telecommunication Services are
sectors with least allocation.
From an individual holdings point of view, the ETF holds 199
securities with almost 40% allocation to its top 10 holdings.
However, it is prudent to note that the top 10 holdings comprise
of stocks from a variety of sectors. Energy majors - Reliance
Industries and Oil and Natural Gas Corporation - together account
for almost 14% allocation.
Like many other funds in the space, EPI has been performing
well in the second half of this year and has 52-week high of
$21.59 and 52-week low of 15.41 (read
Time to Worry about Brazil ETFs?
). The fund has returned about 5.08% over the last one-year
period and 22.26% year-to-date (as of September 30, 2012).
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WISDMTR-IN EARN (EPI): ETF Research Reports
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