Investors may not always think about the geopolitics happening in their portfolios, but managers likely are. When Russia invaded Ukraine, global markets took notice and reacted accordingly, with energy prices seeing the most impact. Similarly, ever-simmering tension and trade drama between China and the U.S. over semiconductors has changed the nature of that industry. U.S. geopolitical challenges with China and Russia may point investors instead toward the case for an India ETF like EPI.
While many foreign affairs and international politics writers may ascribe “too much” meaning to it, the BRICS acronym can still help investors understand the world. Originally coined by British economist and House of Lords member Jim O’Neill as just the “BRIC” group for a Goldman Sachs research paper, BRICS started out as a way of identifying and grouping major growing economies.
Today, many suggest the grouping also has a political affiliation, but for investors’ purposes, the focus remains on the opportunities in the BRICS countries. The U.S., perhaps over-reliant on that political view of an arbitrary grouping, is deepening relations with India, which should prompt investors to take a closer look at the South Asian nation.
See more: “The Case for Standout Japan ETF DXJ”
Why invest in an India ETF? The country presents significant emerging markets opportunities, with its massive population and a steadily growing middle class. It also produces significant key exports, with its huge generic pharmaceuticals export market an example. Led by controversial Prime Minister Narendra Modi, the country is also eyeing increased foreign investment via government incentives.
Understanding the India ETF EPI
Should the U.S. deepen trade relations with India as China tensions persist, it could boost the overall picture for India’s economy. That, and an expensive U.S. stock market, could point investors to an India ETF like the WisdomTree India Earnings Fund (EPI).
EPI tracks the WisdomTree India Earnings Index for an 84 basis point (bps) fee. Its index equal-weights holdings rather than offering market-cap-weighted exposure, which can reduce risk. EPI has returned 13.4% YTD and 21.6% over the last year, making it an intriguing option for all types of portfolios.
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