India’s population continues to grow at a rampant pace, which is the most important factor for economic growth. Even if you look domestically, have you ever noticed that cities and towns with declining populations don’t do well economically and that cities and towns with growing populations (often due to migration) have strong local economies? That’s not a coincidence. In the case of India, population growth isn’t the only positive catalyst.
One of the biggest risks to the global economy is China. Some people feel as though China is out of the woods, while others believe it is still on the brink of financial catastrophe. If China were to falter it would lead to contagion throughout the global economy due to trade. (For more, see: Will China's Economic Turnaround Last?)
According to Jeffrey Kleintop, chief global investment strategist at Charles Schwab Corp., India’s exposure to the global economy isn’t as high as most emerging markets, with 23.6% of GDP coming from exports. India is also primarily a service-based economy, which means it’s not going to take too big of a hit from plunging commodities or weak manufacturing. According to the World Bank, 52.1% of the value of India’s GDP is from services, which is even higher than China’s at 48%.
While the U.S. is more service-oriented than is widely believed, Kleintop still believes that the U.S. can copy a page out of India’s playbook and focus more on services going forward in order to fuel growth.
Despite India’s economic strength and potential, it’s not immune to a global economic slowdown, if that were to occur. However, it should weather any potential economic storms better than most countries and it should have exceptional long-term potential. There are several ways to invest in India via exchange-traded funds (ETFs), including PowerShares India ETF (PIN), iShares MSCI India (INDA) and WisdomTree India Earnings ETF (EPI). (For more, see: An Introduction to the Indian Stock Market.)
Here are some key metrics:
Net Assets: $382.80 million
Expense Ratio: 0.82%
Average Daily Trading Volume: 1,138,810
1-Year Performance: -5.50%
Dividend Yield: 1.17%
Net Assets: $3.48 billion
Expense Ratio: 0.68%
Average Daily Trading Volume: 2,003,190
1-Year Performance: -15.05%
Dividend Yield: 1.21%
Net Assets: $1.48 billion
Expense Ratio: 0.84%
Average Daily Trading Volume: 4,395,590
1-Year Performance: -14.02%
Dividend Yield: 1.12%