“The government has also taken steps to plug leaks in the system by paying out subsidies directly, via bank accounts, rather than through agents or intermediaries,” according to BlackRock. “Measures aimed at increasing financial penetration and bringing swathes of the informal economy into the formal economy are supportive of long-term growth, in our view.”
Indian Government Tackles Bureaucratic Barriers
The $1.14 billion INDY follows the Nifty 50 Index, but actually holds 53 stocks. Although INDY is slightly more volatile than the aforementioned INDA, the former is down 6% this year. INDY allocates 35.7% of its weight to financial services stocks. The technology and energy sectors combine for over a quarter of the fund’s weight.
“The Indian government is tackling chronic low productivity, bad loans in the banking system and the bureaucratic barriers hampering the private sector,” said BlackRock. “Financial sector reform is particularly encouraging. A government-led capital injection into banks has helped to repair balance sheets. The clean-up of non-performing loans and banking sector recapitalization are clearing the path for private sector investments and a long-awaited capex recovery. Corporate earnings in India are looking up again, with analysts expecting 2018 earnings growth in the area of 21%.”
Other India ETFs include the WisdomTree India Earnings Fund (EPI), VanEck Vectors India Small-Cap Index ETF (SCIF), and iShares MSCI India Small-Cap ETF (SMIN).
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