Why Not An India ETF?

November 05, 2006 at 1:55 am by Tom Lydon      Bookmark and Share

Indiaflag Currently there is not an exchange traded fund (ETF) covering India, even though it is the fifth largest economy in the world and shows unlimited possibilities.  Why is that?  Perhaps it has to do with the difficulties foreign investors face with the country.  According to the Government of India, after independence from Britain, India set up a highly protected economy with lots of bureaucratic red tape and distrust of foreign business.  The government is slow to change, and caps on foreign investment and approval by the government make investing in the country difficult.

An India ETF would attract too much money from outside the country.  With more money coming in, it would be difficult to stop issuing more shares to keep up with demand and government approval.  With a closed-end fund, there is more control over shares issued and foreign investment.  Until there is change, investors may look to The India Fund (IFN) for exposure in India.

For full disclosure, some of Tom Lydon’s clients own IFN in their portfolio.

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  • Joe
    What about NII LN
  • Mr. Lydon - The other investme
    Mr. Lydon,

    Don't forget the etfs recently listed on HK and Singapore exchanges, although they're not true etfs in that they trade off notes. I wonder if India will take action against participatory notes, fun times.

    Mr. Lydon
  • The Powershares Tiger India ETF is on its way. However it contains just 18 companies, 12 of which are ADRs, while the rest are companies based in the US (Kanbay, Lionbridge, Covansys, iGATE, Syntel and Cognizant) who have significant offshore operations in India.

    While I have nothing against IT consulting firms and have featured some of them in my newsletters (RCM Technologies, Wipro and Infosys), this index is very heavily weighted towards IT consulting firms.

    We may just have to wait a little longer for a good India ETF listed on the US exchanges. Barring certain industries like defense and mining, the government has lifted restrictions in most other areas. As of September 2006, inflows from Foreign Institutional Investors into the Indian stock market was much higher than investments by domestic mutual funds.

    Asif
  • Tom Lydon
    It looks like we are getting closer on an new India ETF. While there are investment opportunities, it will be interesting to see how it all unfolds. Thanks for the updates!
  • Adam Weinstein
    I have noticed one thing in anything Ive done so far in life....People are into what could have, should have, etc...or why not? alot ask...I understand its anyones concern....In terms of etfs...I believe it's a great key that all of us have to basically a global inv. world at the access of our finger tips...I find the most important thing is learning what is available, looking at positives and negatives, and when to buy and sell...Doesn't that make sense? In front of us is a key(with proper knowledge) for investing through Global universe...One blink or snap doesnt make evrything arive....Give some time and gradually more and more will come...if all was here at once we would be unable to take advantage of everything at once....I hope some of you agree and keep your eyes posted on whats available today and yesturday....whatever is available tomorrow(new) we should be happy providing we can grab an advatage-

    Wise investing-

    Adam Weinstein
  • davison
    The Government of Ghana, in West Africa, has recieved funds from the INTERNATIONAL DEVELOPMENT ASSOCIATION(IDA) with loan number :IDA CREDIT NO:3964 GH,and AGENCE FRANCAISE DE DEVELOPMENT(AFD),AFD LOAN:CGH 6004.01.G, towards the cost of community based rural development projects ( CBRDP) and intends to apply part of this fund to cover eligible payments under the contracts for the supply of the following items:

    1:MINISTRY OF AGRICULTURE:

    Water treatment plants and Chemicals,Animal Feeds/ingredients,Breverages,Fertilizers,Agrochemicals Products,pesticides and crop protection chemicals,seed treatment chemicals,Knapsack sprayer,Fishing equipments,Coffee/Machines,Cements.

    2:MINISTRY OF INTERIOR:
    Carbon Papers,Tires and rims ,Domestic Sewing Machines,PVC Raincoat,Footwears,Safety boot and Helmet,Umbrella,T-shirts,Towels,Blankets,Marbles/Tiles and survey equipments.

    3:MINISTRY OF EDUCATION:

    Stationeries,Laptop and Desk Top Computers,Furnitures.

    4:MINISTRY OF HEALTH:

    Plumbing Materials,Hospital bed sheet ,Medical,laboratory equipments,(Clutches,Syringes,needles, surgical instruments,wheel chairs,beds),Condoms,HIV test kits and first aid kits. Hospital beds?Bottled Water.

    5:MINISTRY OF SPORTS:

    sports wears and sports kits


    Tender is open to all eligible foreign contractors from eligible source countries as defined in the guidelines of the procurement Board of ther Republic of Ghana.If you can handle the supply any of the above items, get back to me for more details. I am a commision agent.

    Thanks,

    MR.Biro Keven
    Govt.Accredited Agent
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