As the world’s largest wealth fund increases its holdings in India, the average retail investors can also access this emerging market through country-specific exchange traded funds.
For example, the PowerShares India Portfolio (NYSEArca: PIN), iShares MSCI India ET (NYSEArca: INDA) and iShares India 50 ETF (NasdaqGM: INDY) all provide access to India’s equities markets.
PIN tries to reflect the performance of the Indus India Index, which is comprised of 50 Indian stocks selected from the largest companies listed on the two major Indian exchanges, and tilts toward energy 22.9% and information technology 20.8%. The PowerShares offering has a 0.82% expense ratio.
The iShares MSCI India ETF tracks a slightly broader index of 67 Indian stocks, focusing on information tech 22.0% and financials 18.8%. INDA has a 0.67% expense ratio.
The iShares India 50 ETF follows the CNX Nifty Index and has a heavy weight toward banks 22.1%, followed by computer software firms 14.4%. INDY has a slightly higher 0.94% expense ratio.
Indian equities have been among the best performing emerging market assets as elections earlier this year fueled speculation that the country will implement reforms to bolster the economy. Year-to-date, PIN has increased 25.9%, INDA gained 24.6% and INDY rose 30.3%. [India ETFs Look Pricey]
Norway’s sovereign wealth fund, which holds $860 billion in assets under management, increased holdings “significantly” in India as the recently elected Prime Minister Narendra Modi opens the economy to investments and competition, reports Saleha Mohsin for Bloomberg.
The sovereign wealth fund raised its Indian bonds and stock position to 0.9% of its fixed-income and equity portfolio in an attempt to increase its emerging market exposure and generate greater returns.
“India is one of those markets where you should expect that we will continue to increase our investments over time, significantly,” Yngve Slyngstad, chief executive officer of the fund, said. “Relative to the size of the economy our investments are smaller than you would expect.”
Since being elected, Modi has turned to market-based energy pricing, increased foreign investment in the defense industry and revitalized the manufacturing sector.
“The changes that we have seen have given us more confidence that we will have good investment potential in the coming years,” Slyngstad added. “We will continue to increase our investments there, both on the fixed-income side and in regards to our company investments.” [Buying the Dip in India ETFs]
India’s economy is expected to expand 5.5% in the fiscal year through March 2015, compared to the 4.7% growth over the previous period but still lower than the average 8.7% between 2006 through 2010.
For more information on India, visit our India category.
Max Chen contributed to this article.