ETF investors can gain targeted exposure to this emerging market through options like the iShares MSCI India ETF (BATS: INDA), PowerShares India Portfolio (NYSEArca: PIN) and WisdomTree India Earnings ETF (NYSE: EPI).
INDA tracks the MSCI India Index, a market capitalization-weighted index that is fairly top heavy. PIN follows the Indus India Index, which takes the largest companies listed on two major Indian exchanges. EPI tracks the WisdomTree India Earnings Index, which weights holdings based on earnings, so the fund may have a greater tilt toward smaller companies.
Todd Rosenbluth, director of mutual fund and ETF research at S&P Capital IQ, argues that investors are taking a look at these India country-specific ETFs because the market looks like the best area in the emerging markets.
“Investors used to think of BRIC as a group, but Brazil and Russia have struggled more economically and their stock performance has differed from China and India,” Rosenbluth told InvestmentNews. “That’s why investors are increasingly looking to single-country funds.”
India is also a large component in many broad emerging market funds. For instance, India makes up 13.2% of Vanguard FTSE Emerging Markets ETF (NYSEArca: VWO) and 9.0% of iShares MSCI Emerging Markets ETF (NYSEArca: EEM). However, these broad emerging market ETFs have been dragged down by their weights to less favorable exposures, like Russia and Brazil.
Max Chen contributed to this article.