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.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.