New Beginnings for International Diversification ETFs in India | ETF Trends

Getting international exposure via emerging markets doesn’t have to be a risky proposition when you look at value-oriented economies that are thriving despite the pandemic. ETF investors can get exposure to the world’s third-largest economy via single-country funds like the iShares India 50 ETF (INDY).

INDY seeks to track the investment results of the Nifty 50 Index composed of 50 of the largest Indian equities. The Subsidiary and the fund will collectively invest at least 90% of the fund’s assets in the component securities of the underlying index and in investments that have economic characteristics that are substantially identical to the component securities of the underlying index.

The underlying index measures the equity performance of the top 50 companies by free float market capitalization whose equity securities trade in the Indian securities markets.

INDY investors get:

  1. Exposure to the large companies in India
  2. Access to 50 of the largest Indian stocks in a single fund
  3. Use to express a single country view

As India’s economy continues to recover, INDY has been on a steady ascent since the pandemic sell-offs back in March. Per Morningstar, the fund is up 4% thus far this year and 14.83% the past three months–signs a recovery is picking up.

INDY Chart

Slow and Steady Wins The Race

If ETF traders are looking for a sharper swing for short-term gains, INDY may not be the play. The best option for the fund is long-term gain, but the good news is that economic fundamentals point to more bullishness and recovery.

Per a Mint report, “India’s economy recovered faster than expected in the September quarter as a pick-up in manufacturing helped GDP clock a lower contraction of 7.5 per cent and held out hopes for further improvement on better consumer demand.”

“India has indeed been severely affected by the pandemic but is gradually recovering,” IMF chief spokesperson Gerry Rice told reporters.

Additionally, the report noted that “Fiscal, monetary, and financial sector measures announced to date provided much-needed support to the economy, including businesses, agriculture, and vulnerable households, Rice said in response to a question on the IMF’s assessment of India’s economy during the coronavirus pandemic.”

“To further support growth, we believe the Indian authorities should prioritize swift implementation of the existing support programs and may need to consider expanding their scope, as warranted,” Rice said.

As opposed to a trading strategy, ETF investors can use INDY in their toolbox for a long-term international diversification play.

For more news and information, visit the Equity ETF Channel.