Emerging markets equities and exchange traded funds are rallying this year, a theme that some analysts and investors believe can extend into 2017.
India ETFs have been solid performers this year, though they are lagging broader emerging markets indexes year-to-date, a trend that could change for the better in 2017.
The iShares MSCI India ETF (BATS: INDA), PowerShares India Portfolio (NYSEArca: PIN) and WisdomTree India Earnings ETF (NYSE: EPI) are among the most popular India ETFs.
Over the short-term, India has benefited from cheap energy prices as the country is one of the largest importers of crude oil. Looking further out, economic reforms, including more business-friendly and growth-oriented policies, could help support growth over the medium-term.
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Many argue that India’s favorable demographics will help support a growing economy. Over a third of India’s 1.3 billion people are between the ages of 15 and 34 with a median age of 27, compared to 37 in China, 38 in the U.S., 41 in developed Europe and 46 in Japan. India’s population is also expected to grow by 1.4%, compared to China’s 0.5% and 0.9% in the U.S.
“India is the seventh largest economy in the world at a nominal GDP of $2.29 trillion, and it’s growing by leaps and bounds. In 2015, it was estimated to grow 7.5%, surpassing China. In 2016 and 2017, it’s forecast to grow 7.6% and 7.7%, respectively, largely due to the expanding middle class and reforms Modi has made,” according to TheStreet.com.
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.
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“While in office, Modi has said that his goal is to get India into the top 25 of ease of doing business in the world, up from 142nd in 2014,” reports TheStreet. “In India, not only is it difficult to lay people off, but there are also many layers of government, leading to significant amounts of bureaucracy.”
For more information on India, visit our India category.