Top ETFs to Invest in India

Amid the seemingly unending saga of global economic uncertainties, India stands tall backed by strong macroeconomic fundamentals, fiscal discipline, high saving rates, robust domestic demand and demographic trends. India is a land of diversity, with many cultures, languages, religions, ethnicities, geographical features and climates. And from an economic perspective, India is a land of opportunities.

India is the world’s fifth largest economy and one of the fastest-growing trillion-dollar economies in the world. According to IMF’s latest October 2022 outlook, India’s economy is expected to clock a growth of 6.6% in 2022, down by a tad (0.6 percentage point) since the July forecast. The pace of growth in 2023 is projected at 6.1%, with no change since July. India’s nominal GDP for 2022, which is assessed at $3.47 trillion, is poised to be $5.37 trillion by 2027 based on IMF estimates.

India is a domestic consumption-led economy with exports contributing roughly 20% to its GDP. Over the years, the rising middle class and corresponding shift in spending pattern have strengthened its consumption. Government spending has provided further support to the trend. India is home to a 1.4-billion strong population that is younger than that of any other major economy, a huge section of which is poised to enter the consumer class in the coming years. India’s household savings have historically been high, and this provides support to its economy even through challenging cycles in economic activity.

Here’s a look at some of the exchange traded funds (ETFs) available for U.S. investors to invest in India.

iShares MSCI India ETF (INDA)

Launched in February 2012, iShares MSCI India ETF provides exposure to select large- and mid-cap companies in India. With $4.35 billion as assets under management, INDA is the largest India-centric ETF. INDA has a portfolio of 108 Indian companies with highest exposure to financials, information technology and energy. The fund benchmarked against the MSCI India Index and has a beta (3 years) of 0.88. The ETF has an expense ratio of 0.65% and down by 9.03% year-to-date. The top ten stock holdings add up to around 45%.

• Reliance Industries Limited
• Infosys Limited (INFY)
• ICICI Bank Limited (IBN)
• Housing Development Finance Corporation Limited
• Tata Consultancy Services Limited
• Hindustan Unilever Limited
• Axis Bank Limited
• Bajaj Finance Limited
• Bharti Airtel Limited
• Larsen and Toubro Limited 

WisdomTree India Earnings Fund (EPI)

WisdomTree India Earnings Fund was launched in 2008. It offers a diversified portfolio of Indian companies across the market cap with a large-cap tilt. EPI follows a valuation-centric approach to investing in India. While the fund has allocations across 10 sectors, the top four sectors, namely materials, energy, financials and information technology, constitute 70% of the portfolio. EPI manages assets to the tune of $688 million and has an expense ratio of 0.84%. The fund is down 7.51% YTD.

• Reliance Industries Limited
• Tata Steel
• Infosys Limited (INFY)
• ICICI Bank Limited (IBN)
• Oil & Natural Gas Corporation Limited
• Axis Bank
• Tata Consultancy Services Limited
• Hindalco Limited
• Power Grid Corporation of India Limited
• NTPC Limited

iShares India 50 ETF (INDY)

The third largest India-centric ETF is the iShares India 50 ETF. The fund is benchmarked against Nifty 50, which is the most popular large-cap index in the country. The Nifty 50 Index represents about 62% of the free float market capitalization of the stocks listed on NSE as on September 30, 2022. Thus, INDY provides a passive, single-window access to the U.S. investors to the top 50 companies of India. The fund was launched in November 2009 and currently has $578 million as assets under management with an expense ratio of 0.89%. The top ten constituents dominate 58% of the portfolio allocations.

• Reliance Industries Limited
• HDFC Bank Limited (HDB)
• ICICI Bank Limited (IBN)
• Infosys Limited (INFY)
• Housing Development Finance Corporation Limited
• Tata Consultancy Services Limited
• ITC Limited
• Kotak Mahindra Bank Limited
• Larsen and Toubro Limited
• Axis Bank Limited

Two ETFs stand out in terms of the resilience shown resilience in 2022.

First Trust India NIFTY 50 Equal Weight ETF (NFTY)

While majority of the popular indexes are market-cap based, First Trust India NIFTY 50 Equal Weight ETF tracks the Nifty 50 Equal Weight Index, which is an equal weighted strategy and provides exposure to all the 50 companies of Nifty 50 Index in equal proportion, i.e., 2%. The fund is currently down by 4.5% YTD.

Columbia India Consumer ETF (INCO)

Columbia India Consumer ETF has its focus on India’s growing consumer industry. The ETF tracks the Indxx India Consumer Index, which are constituted of companies in the auto, food products, beverages, media and household products space which could benefit from India's rising consumption of goods and services. The ETF is currently down by 4.03% YTD.

Other available to access Indian stock markets are:

• iSharesMSCI India Small-Cap ETF (SMIN)
• Invesco IndiaETF (PIN)
• FranklinFTSE India ETF (FLIN)
• VanEck India Growth LeadersETF (GLIN)
• Nifty India FinancialsETF (INDF)
• WisdomTree India ex-State-Owned Enterprises Fund (IXSE)
• VanEck Digital India ETF (DGIN)
• India Internet & Ecommerce ETF (INQQ)

Disclaimer: The author has no position in any stocks mentioned. Investors should consider the above information not as a de facto recommendation, but as an idea for further consideration. The report has been carefully prepared, and any exclusions or errors in it are totally unintentional. Scheme data and details based on factsheet from respective websites as on November 3, 2022. Nominal GDP is the Gross domestic product, current prices (U.S. dollars).

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story

EPI INDY NFTY INCO FLIN GLIN DGIN INQQ

Other Topics

Investing