The U.S. is not the only large equity market that has been racing to record highs. Indian stocks have accomplishing the same feat, taking some U.S. investors along for the ride.
Only stocks in the United Arab Emirates and Egypt have outperformed Indian shares this year among emerging markets, according to Thomson Reuters Datastream. Of the top 11 U.S.-listed non-leveraged exchange traded funds to this point in 2014, seven are India ETFs.
While stocks in Egypt have slightly outpaced their Indian counterparts this year, the 24.5% year-to-date gain for the Market Vectors Egypt Index ETF (NYSEArca: EGPT) is not enough to qualify the fund for admittance to the top 10 foreign ETFs this year. Led by the iShares MSCI India Small-Cap ETF (BATS: SMIN), that list is comprised entirely of India ETFs. [Behind the Dominance of India ETFs]
The rise of India ETFs has not been lost on U.S. investors. The 10 India ETFs tracked by Morningstar have a combined $6.3 billion in assets under management, up 47% since January, reports Ashley Lau for Reuters.
However, the estimate that U.S.-listed India ETFs have attracted a combined $2 billion in new assets this year is wrong. Combined, the iShares MSCI India ET (NYSEArca: INDA) and the WisdomTree India Earnings Fund (NYSEArca: EPI), the largest India ETF, have added over $2.1 billion in new assets.
The Market Vectors India Small-Cap Index ETF (NYSEArca: SCIF) has added nearly $98 million of its $280.4 million in assets under management while the $93.3 million added by the PowerShares India Portfolio (NYSEArca: PIN) makes that ETF the top asset gatherer this year among equity-based emerging markets ETFs issued by PowerShares.
Reuters notes money managers have been pulling assets from other emerging markets to establish and add to positions in India ETFs. For example, investors have pulled nearly $500 million from the iShares China Large-Cap ETF (NYSEArca: FXI) this year while almost $3.2 billion has come out of the iShares MSCI Emerging Markets ETF (NYSEArca: EEM).
There is room for growth with India ETFs. EPI, the WisdomTree offering, has $2.3 billion in assets under management, less than half the AUM totals for FXI and the iShares MSCI Brazil Capped ETF (NYSEArca: EWZ) and barely more than half the assets held by the iShares MSCI South Korea Capped ETF (NYSEArca: EWY), just to name a few. [Buying the Dip in India ETFs]
A new political environment in India, Asia’s third-largest economy, could foster changes that drive additional upside for India ETFs.
“What we found most compelling was Jayant Sinha’s characterization of India’s growth trajectory as one that will be both peaceful and sustainable in nature. This is a growth model he aptly termed “Japan-like,” drawing parallels to Abe and his administration circa 2012. Further, Sinha is confident in Modi’s reelection in 2019, which would set the stage for a Modi-led Indian rule over the next ten years. This would give the single-party-majority Congress sufficient time to put much-needed structural reforms in place,” according to a recent research piece by WisdomTree.
WisdomTree India Earnings Fund
