Earlier this year, the investing world buzzed with excitement over the reopening of China and its economy. Which led many to believe it was a promising bet for emerging market investments. However, as expectations for China’s economy cooled in both the short and long term, investors are now seeking alternative avenues to invest in emerging markets.
One such avenue gaining attention is India. Recently, India became the world’s fifth-largest economy and most populous country. It also boasted one of the best-performing stock markets in the second quarter of 2023. In fact, some experts and analysts have begun to wonder if India could become the next China.
Several ETFs offer targeted exposure to the burgeoning Indian economy. In this article, we will dive into four top-performing India ETFs, exploring their key characteristics.
Top YTD India ETF Performers
The Columbia India Consumer ETF (INCO) focuses on companies in the country’s consumer industries. With an expense ratio of 0.75%, INCO has seen a YTD return of 15.32% and a one-year return of 18.02%, showing positive growth and performance over the past year. Its AUM stands at $91.0 million, suggesting it has a somewhat well-established presence in the market. Targeting India’s growing consumer class and recording one of the highest YTD returns among India ETFs, INCO is an attractive option for investors.
The India Internet & E-commerce ETF (INQQ) focuses on companies in the e-commerce industry in India, tapping into the country’s consumer market in a way similar to that of INCO. However, with an expense ratio of 0.86%, this ETF is a more expensive option compared to INCO. Making its debut just over a year ago, INQQ has an AUM of $5.1 million. The fund has seen positive net flows in the past month of $2.63 million, indicating increased investor interest.
INQQ has a strong three-month return of 25.08% and a YTD return of 16.87%, indicating a very positive trajectory. With a focus on the e-commerce industries, there is a strong possibility for potential growth in this ETF. Despite being a relatively new product, and having a small number of assets, INQQ offers attractive investment opportunities for investors seeking exposure to a particular cross-section of India’s market.
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Other India ETFs
For investors looking for funds that have exhibited strong performance over a longer period, the iShares MSCI India Small-Cap ETF (SMIN) and the WisdomTree India Earnings Fund (EPI) had the best three-year annualized returns among the field of India-focused ETFs.
SMIN provides investors with exposure to a diversified portfolio of more than 400 stocks. With an expense ratio of 0.74%, this ETF offers a cost-effective way for investors to gain exposure to India’s small-cap market. Such stocks can offer a different level of potential growth and volatility compared to products dominated by mega-cap equities. Since its inception on February 8, 2012, SMIN has shown consistent performance. It has achieved a YTD return of 12.62% and an impressive three-year return of 25.33%. With an AUM of $274.8 million, this ETF has attracted a significant amount of investor assets. For investors seeking exposure to the Indian economy through small-cap stocks, SMIN presents an attractive investment option with its track record of performance and portfolio diversification.
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With an expense ratio of 0.84%, EPI is among the most expensive U.S.-listed ETFs to target India’s markets. Since its inception on February 22, 2008, the fund has gathered $925.6 million in AUM and is the second-largest ETF to cover Indian stocks. Its underlying index’s methodology selects stocks mainly based on earnings rather than market capitalization, meaning it is targeting companies that are pulling in money rather than just focusing on company size.
That focus has paid off to a certain extent. EPI has delivered strong performance over the years, with a one-year return of 18.45% and a three-year return of 22.16%. With 15 years of trading, the fund has a well-established track record.
Conclusion
As investors seek to diversify their portfolios and capitalize on the potential growth in India’s emerging market, these India ETFs present attractive investment opportunities. Whether it’s consumer industries, e-commerce, small-cap stocks, or high-earning Indian equities, each ETF offers a distinct investment proposition to suit different investment strategies.
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