The Indian government hinted at winding up fiscal stimulus initiatives and cutting back on loose monetary policies, writes Arun Prabhudesai for Track.in. Demand has been on the rebound and the benchmark inflation index has also risen. (Why India is moving up).

Prime Minister Manmohan Singh believes that stimulus efforts will be eased because of very clear signs of recovery in the Indian economy. The Royal Bank of India governor has also opined it appropriate for the Central Bank to incrementally reduce the monetary stimulus.

India’s entrepreneurial momentum is continuing to grow, with a large, under-30 populace that is low on experience but eager to take risks, comments Sramana Mitra for Forbes. For instance, Sridhar Vembu, CEO of Zoho, built a $60 million company that has become competitive in the worldwide arena and he did it with no outside financing. (Possible India small-cap ETF).

For more information on India, visit our India category.

• PowerShares India (NYSEArca: PIN): up 73.6% year-to-date

• WisdomTree India Earnings (NYSEArca: EPI): up 90.4% year-to-date

Max Chen contributed to this article.

Emerging Global Shares has filed to launch a group of ETFs aimed squarely at the BRIC economies, according to Cinthia Murphy for Index Universe:

Emerging Global Shares INDXX India Infrastructure Index Fund

• Emerging Global Shares INDXX India Infrastructure Index Fund
• Emerging Global Shares INDXX China Infrastructure Index Fund
• Emerging Global Shares INDXX Brazil Infrastructure Index Fund
• Emerging Global Shares INDXX India Mid Cap Index Fund
• Emerging Global Shares INDXX China Mid Cap Index Fund
• Emerging Global Shares INDXX Brazil Mid Cap Index Fund
• Emerging Global Shares INDXX Growing Asia Large Cap Index Fund

Every single company within these funds will have no more than a 10% weighting. Net operating expenses are pegged at 0.85% for each fund. ALPS Advisors is the advisor for each fund, with Emerging Global Advisors LLC the subadvisor. (Read about the widening wealth shift between the United States and emerging markets).

Each fund will invest in securities, ADRs and GDRs of various companies to replicate their respective indexes. A fully replicating strategy will be used to assemble the funds, however, representative sampling may be used, if needed. (The ultimate guide to the BRIC ETFs). You can read the prospectus for the funds here.

The BRIC economies have been standouts this year as the world recovers from the global financial crisis, gaining about 110% since the market’s low. Russia has been one of the strongest, gaining 137% year-to-date. Brazil has gained 117%, China is up about 60% and India has added about 90%.

For more stories about BRIC ETFs, visit our BRIC category.

Holdings: EEG holds companies domiciled in emerging markets; some of the top companies in the fund include Russian natural gas company Gazprom, Brazilian energy company Petroleo Brasileiro, Latin American wireless provider America Movil and Bank of China.

Objective: EEG seeks to track the Dow Jones Emerging Markets Titans Composite Index, which is an index composed of a representative sample of 100 emerging market companies deemed by Dow Jones to be leaders in each of 10 sectors.

Things to Know

• Brazil is the top country, with 24.9% of the weighting. China has 24.3%, Russia has 13.4% and India has 13%. Other countries include Mexico, South Africa, Chile and Indonesia.
• Oil and gas is the top sector, weighted at 30.8%; financial is 22.1%; telecommunications is 11.6%; and basic materials is 9.3%.
• The expense ratio is 0.75%.
• EEG is a relative newcomer on the ETF scene – the fund launched on July 22.

The Latest News

• Emerging Global Advisors CEO Bob Holderith feels that interest in emerging markets should continue to expand. “It’s a 25-year growth story in its sixth year.” The positive growth outlook for emerging markets goes hand-in-hand with the changing demographic picture in these countries.
• Holderith notes that in most of these countries, there’s a huge young population, all looking for the “Western experience”: cell phones, iPods, dining out and more. (More on Emerging Global Advisors).
• Although the pace may eventually slow down, Barron’s reports that emerging markets still have room left to grow in the long haul. And for the time being, they may be the place to hide out as developed markets still work toward normalcy.
• Emerging markets already account for one-third of the global GDP and 10% of the world’s market capitalization.

At the end of September, U.S.-listed ETNs held $6.9 billion in assets, compared with the $697 billion held in ETFs, writes Matt Hougan for IndexUniverse. (What are ETNs?)

There are three key advantages they enjoy:

• When ETNs first came to the market, the investment vehicle proved to be popular among investors who were looking for access to difficult-to-target markets, such as commodities and certain foreign markets. Investors flocked to funds such as the iPath MSCI India (NYSEArca: INP) and iPath Dow Jones-UBS Commodity Index ETN (NYSEArca: DJP). There are ETFs that target these areas now, but ETNs still cover certain areas not yet covered by ETFs.

• ETNs promise perfect tracking – an investor receives the full return of the benchmark, minus costs. Commodity ETFs on the other hand do show some tracking errors. Any tracking error in an ETN is borne by the issuer; tracking error in ETFs are borne by the investor.

• ETNs also have the benefit of being treated like a zero-dividend stock for tax purposes. This means that you don’t pay taxes until you sell, and holding a commodity ETN longer than a year only costs an investor 15% long-term capital gains taxes when sold. Futures-based commodity ETFs are treated like futures, which means gains are marked-to-market each year and investors pay taxes on gains at 60%/40% long-term/short-term capital gains tax rate. Be sure to consult your tax professional for advice. (Are you ready for the taxman?)

A deterrent for ETNs investing is that they are unsecured debt notes. The ETN’s value depends on the credit of an issuing bank – if the bank bankrupts, you’re out of luck. Most ETNs, however, offer daily redemptions at net asset value. Potential ETN investors should note that the CFTC’s plans for regulation in the commodities market could force some ETNs to close down, but this remains to be seen. (Differences between ETNs and ETFs)

For more information on ETNs, visit our ETNs category.

Some of the more heavily traded ETNs include:

• iPath DJ AIG Lead TR Sub-Idx ETN (NYSEArca: LD): up 128.9% year-to-date
• iPath DJ AIG Sugar TR Sub-Idx ETN (NYSEArca: SGG): up 57.7% year-to-date
• iPath Dow Jones-AIG Commodity Idx TR ETN (NYSEArca: DJP): up 16.2% year-to-date
• iPath MSCI India Index ETN (NYSEArca: INP): up 82.4% year-to-date
• iPath S&P GSCI Crude Oil Ttl Ret Idx ETN (NYSEArca: OIL): up 16.1% year-to-date

Max Chen contributed to this article.

Van Eck has registered with the Securities and Exchange Commission (SEC) for a new India small-cap ETF, reports Cinthia Murphy for IndexUniverse. The Market Vectors India Small-Cap ETF will seek to reflect the performance of the Market Vectors India Small-Cap Index. Potential investors should note that the fund will invest in the more volatile aspects of an already volatile equities market.

There are currently three ways to gain exposure to India’s economy: WisdomTree India Earnings Fund (NYSEArca: EPI), PowerShares India (NYSEArca: PIN) and iPath MSCI India Index (NYSEArca: INP). PIN and INP have exposure to large-caps; EPI has 20% weighted in mid-caps and the rest of its exposure is in large-caps.

India’s Finance Minister Pranab Mukherjee stated that the economy is recovery, albeit a slow one, according to RTTNews. The Prime Minister is for a rational interest rate policy moving along with fiscal measures to nurture the economy.

The Reserve Bank of India has adopted a soft monetary policy, issuing banking sector funds to aid the economy.

SBI Chairman O P Bhatt expects a 7% expansion in fiscal 2010, while RBI Professional forecasters revised their forecast downward to 6%, according to Outlook India. (Why India is moving up).

On the upside:

• Companies will likely ask banks for working capital loans as the IPO market picks up, which would help revive the economy
• The auto and infrastructure industries are seeing more demand
• Industrial production is up
• Business confidence is on the optimistic side
• Stock markets are strong

On the downside:

• Private consumption demand is slowing
• The first quarter showed a decline in corporate sales
• A weak monsoon season has hurt agricultural output
• Credit growth is low
• Exports have dipped

• PowerShares India (NYSEArca: PIN): up 64.2% year-to-date

• WisdomTree India Earnings (NYSEArca: EPI): up 78.7% year-to-date

Max Chen contributed to this article.

The Economist states that cell phones have a different role in developing countries than they do in industrialized nations. Cell phones are giving many of the world’s poor their first exposure to telecommunications. In the developed world, cell phones generally are just extensions to existing land lines.

What has the expansion of cell phones in emerging markets meant for the industry and these countries?

• A recent study showed that adding 10 cell phones per 100 people in a typical developing country will boost GDP growth by 0.8% per person.
• The spread of mobile phones in developing countries has been accompanied by the rise of home-grown mobile operators in China, India, Africa and the Middle East. These providers rival the providers in the West. (What’s next for global telecom?)
• The emergence of China’s two leading telecom equipment-makers, Huawei and ZTE, have entered the global stage in the past five years and now have a growing reputation for quality and innovation, prompting a shakeout among the incumbent Western equipment-makers (How to play China’s telecom boost ).
• The development of new phone-based services, beyond voice calls and basic text messages, are now becoming feasible.. The services tend to center around agricultural advice, health care and money transfer – things that could deliver enormous benefits to residents of poor nations.

For more stories on the telecommunications industry, visit our telecommunications category.

• iShares S&P Global Telecommunications (NYSEArca: IXP): up 6.9% year-to-date

• SPDR S&P International Telecom (NYSE: IST) is up 11% year-to-date

Kevin Grewal contributed to this article.

Turkey. Turkey is rapidly developing and there’s no indication that the economy needs aid from the International Monetary Fund (IMF). Growth in the economy could likely accelerate in 2011 after a return to growth in 2010. Turkey’s market index has been driven up by the banking sector, which makes up around 40% of the market. Bank earnings have been bolstered by a series of rate cuts that have reduced interest on customers’ deposits as lending rates remain high. (Does Turkey need more support?)

• iShares MSCI Turkey Invest Mkt Index (NYSEArca: TUR): up 179% since low; up 101.6% year-to-date

Russia. Next year’s growth could top 2% if oil prices stay high. Greater revenues from taxes on energy companies could also ensure this year’s budget deficit is smaller than expected. Economists believe Russia’s GDP growth may gain a foothold as soon as the fourth quarter because of fiscal stimulus. Additionally, the economy will pick up speed once oil prices increase and world economies recover. The Russian economy is dominated by resources and banking. (Russia’s potential stumbling blocks).

• Market Vectors Russia (NYSEArca: RSX): up 161% since low; up 139.5% year-to-date

Brazil. Brazil could sustain average annual economic growth of 5% over the next 10 years. Low inflation and sound fiscal policy have released a tide of investment in Brazil. For now, Brazil’s small-caps are benefiting from the carry trade. Companies are hiring workers to meet growing demand for manufactured goods and new homes. In 2010, Brazil’s economy is expected to grow 4.4%; this year, growth is expected to be around 0.12%. (Seven things to like about Brazil).

• iShares MSCI Brazil Index (NYSEArca: EWZ): up 125% since low; up 114% year-to-date

India. The Indian Prime Minister’s Economic Advisory Council expects the GDP to expand 6.5% to 6.75% in 2009-10, despite a potential decline in agricultural output. Inflationary concerns may be met by tighter monetary and fiscal policies in the coming months. Factors such as capital flows, domestic demand, portfolio flows and a strong savings rate have India in a good position to continue moving forward. (Why India could strengthen).

• WisdomTree India Earnings (NYSEArca: EPI): up 138% since low; up 88.2% year-to-date

Indonesia. A young population and a falling birth rate equate to a surge in the ratio of working population to the number of dependents. Circumspect fiscal policy has left the government with enough cash for infrastructure and public services. Indonesia may enjoy a period of political stability and does not rely too heavily on exports. Declining interest rates have helped boost consumption, which is around 60% of GDP. (Five points in Indonesia’s favor).

• Market Vectors Indonesia ETF (NYSEArca: IDX): up 180% since the low; up 155.6% since Jan. 20 inception

Max Chen contributed to this article.

According to Gary Gordon for ETF Expert, there is a slight discernible difference between the five largest net exporters and net importers as shown in their respective ETF growths.

Net importers’ five-year total % change:

• Vanguard Total U.S. Market (NYSEArca: VTI): 12.8%
• iShares MSCI United Kingdom (NYSEArca: EWU): 10.7%
• iShares MSCI Spain (NYSEArca: EWP): 91.7%
• iShares MSCI France (NYSEArca: EWQ): 35.1%
• The India Fund (NYSE: IFN): 129.4%

Net exporters’ five-year total % change:

• iShares FTSE China 25 Index (NYSEArca: FXI): 173.9%
• iShares MSCI Germany (NYSEArca: EWG): 53.9%
• Central Europe/Russia Fund (NYSE: CEE): 91.3%
• iShares South Korea (NYSEArca: EWY): 90.5%
• iShares MSCI Netherlands (NYSEArca: EWN): 46.3%

The data shows that percentage gains are leaning toward exporters and developing countries, more export-dependent, are producing larger percentage returns.

Gordon makes the distinction that successful investing in seemingly export-type countries is more dependent on overall economic growth and less to do with the large “net exporter” moniker.

For more information on ETF trends, visit our trend following category. Read more of Gary Gordon’s ETF observations at ETF Expert.

Max Chen contributed to this article.

• The Indian Prime Minister’s Economic Advisory Council expects the GDP to expand 6.5% to 6.75% in 2009-10. This is despite a potential decline in agricultural output, which may diminish 2% because of a short rainy season.
• Inflationary concerns may be met by tighter monetary and fiscal policies in the coming months, according to The Economic Times. Finance Minister Pranab Mukherjee believes reducing the government stimulus, however, may be premature. Wholesale price inflation may reach 6% by March of 2010 from the current rate of about 1%. The projected consolidated fiscal deficit is 10.09% for 2009-10.
• One factor contributing to the new forecast include a strong industrial sector, growing at its fastest pace in 22 months in August.

Chakravarthy Rangarajan, a top aide to the Prime Minister, says the monetary policy should remain “accommodative” and interest rates should be left unchanged to ease the economic recovery, report Kartik Goyal and Cherian Thomas for Bloomberg. Early signs of inflation could force India to act early on interest rate changes.

For more information on India, visit our India category.

• PowerShares India (NYSEArca: PIN): up 75.7% year-to-date

• WisdomTree India Earnings (NYSEArca: EPI): up 90.7% year-to-date

Max Chen contributed to this article.

What’s different this time is that corporations aren’t looking abroad to growing nations such as China, Brazil and India to cut costs, but instead to drive revenues, reports The Los Angeles Times.

• Companies have been global for some years now, but a trend of focusing on international consumers is emerging as economies become increasingly middle class.
• The size of emerging markets dwarfs the domestic markets of most developed nations. China, India and Brazil have a combined population of more than 2.6 billion people, many of them young and increasingly affluent, in contrast to the aging and far smaller populations of Western Europe, Japan and the United States, making them even more attractive. (Learn more about the BRIC economies here).
• Not only will this trend help drive profits, but some believe that it could be a source of new investment and jobs in the United States.

On the downside, this new trend could rekindle politically sensitive issues of earlier years, including outsourcing, U.S. tax and currency policies and other incentives that are tied to overseas investments and the repatriation of profits.

From an investor’s perspective,  some ETFs that could benefit are those that hold companies which do a lot of business overseas, including companies in the food, semiconductor and industrial sectors.

• PowerShares Dynamic Food & Beverage (NYSEArca: PBJ): up 8.2% year-to-date

• SPDR S&P Semiconductor (NYSEArca: XSD): up 66.2% year-to-date

• Vanguard Industrials ETF (NYSEArca: VIS): up 15.7% year-to-date

For more stories on emerging markets, visit our emerging markets category.

Kevin Grewal contributed to this article.