The overall market narrative has focused on the U.S. and potential tariffs on China and some neighbors, but that may be missing important opportunities elsewhere. There are some strong reasons to invest abroad right now for U.S. investors. For one, the AI craze that has driven so much market performance has shown some signs of being a bubble. For another, while a soft landing appears somewhat likely, it’s not locked in yet. Together, it may be worth considering foreign equities to diversify away from the U.S., with India equities ETFs appealing.
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India, as opposed to China, offers some appealing dynamism with reduced geopolitical tensions and, crucially, no domestic real estate debt crisis. The nation’s increasingly educated middle class has long intrigued foreign investors, but a growing crop of ETFs now offers experienced exposure therein. These three India equities ETFs can stand out in the new year.
3 India Equities ETFs to Watch
The Matthews India Active ETF (INDE) launched most recently. Charging 79 basis points (bps), the active India ETF launched in September 2023. INDE actively invests in Indian firms with a fundamental, bottom-up approach. Investing in firms of all market caps, the fund looks for appealing balance sheets, product lines, and healthy cash flow. The fund has returned 18.7% over one year, beating its ETF Database category average.
The VanEck Digital India ETF (DGIN) launched in February 2022. The strategy charges 76 bps for its approach, tracking the MVIS Digital India index. The fund offers pure-play exposure to India firms focused on the digitization of the nation’s economy. It invests in firms deriving at least 50% of revenue from software, hardware, e-commerce, and other digital tech areas. The fund has returned 23.36% YTD.
The Franklin FTSE India ETF (FLIN) launched in February 2018. Charging just 19 bps, the fund tracks the FTSE India RIC Capped Index. It tracks an index of large and mid-size Indian firms. That combination of large and mid-sized firms has returned 13.5% YTD, beating both its ETF Database category and Factset segment averages.
Together, the three India equities ETFs offer a varied set of opportunities to invest abroad. For U.S. investors, the trio could offer a way to diversify abroad amid an uncertain domestic outlook.
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