India exchange-traded funds (ETFs) offer a way for investors to geographically diversify their global portfolios by owning a range of companies in the world’s second-most-populous nation and one of the world’s largest emerging markets. India ETFs track the performance of a basket of equities trading on the National Stock Exchange of India Ltd. (NSE).
Some of India’s largest companies include Indian Oil Corp. Ltd. (IOC), Bharat Petroleum Corp. Ltd. (BPCL), and Tata Motors Ltd. (TATAMOTORS). India has been significantly impacted by the COVID-19 pandemic. The country's GDP fell by 8.0% in 2020 due to the COVID-19 pandemic, according to the World Bank. However, a recent government-led vaccination campaign has led to one billion COVID-19 vaccine doses being administered, an important milestone. Now, India's GDP is expected to expand 9.5% this year.
- Indian equities dramatically outperformed the broader market over the past year.
- The India exchange-traded funds (ETFs) with the best one-year trailing total returns are SMIN, EPI, and GLIN.
- The top holding of each of these funds is Tata Power Company Ltd., Reliance Industries Ltd., and Infosys Ltd., respectively.
Eight India ETFs trade in the United States, excluding inverse and leveraged ETFs as well as funds with less than $50 million in assets under management (AUM). Note that these funds target Indian stocks rather than bonds. India-based equities, as measured by the MSCI India Index, have outperformed the broader market, with a total return of 45.0% over the past 12 months compared to the S&P 500’s total return of 32.1%, as of Nov. 16, 2021.
The best-performing India ETF, based on performance over the past year, is the iShares MSCI India Small-Cap ETF (SMIN). We examine the top three India ETFs below. All numbers below are as of Nov. 16, 2021.
- Performance Over One-Year: 67.6%
- Expense Ratio: 0.81%
- Annual Dividend Yield: 0.08%
- Three-Month Average Daily Volume: 68,638
- Assets Under Management: $423.1 million
- Inception Date: Feb. 8, 2012
- Issuer: BlackRock Financial Management
SMIN tracks the MSCI India Small Cap Index, which gauges the performance of small-cap firms representing the bottom 14% of companies in India’s securities market. The ETF provides diversified exposure to small public companies in India. The fund's portfolio is comprised of several hundreds equities. About half of the fund's assets are concentrated in the materials, industrial, and financial sectors.
SMIN follows a blended strategy, investing in a mix of growth and value stocks. The fund’s top three holdings are Tata Power Company Ltd. (500400:BOM), an electric utility company; SRF Ltd. (503806:BOM), a maker of industrial and specialty chemicals; and Mphasis Ltd. (526299:BOM), an IT services provider.
- Performance Over One-Year: 48.5%
- Expense Ratio: 0.84%
- Annual Dividend Yield: 0.83%
- Three-Month Average Daily Volume: 481,829
- Assets Under Management: $1.0 billion
- Inception Date: Feb. 22, 2008
- Issuer: WisdomTree
EPI tracks the WisdomTree India Earnings Index, a fundamentally weighted index that gauges the performance of profitable companies incorporated and traded in India and eligible to be purchased by foreign investors. The ETF provides a valuation-centric approach to India’s equity markets, weighting individual holdings by earnings rather than by market capitalization. It focuses on large-cap companies across the Indian economy, with energy, banks, and materials accounting for about half of invested assets.
EPI’s top three holdings include Reliance Industries Ltd. (500325:BOM), a manufacturer of petrochemicals, synthetic fibers, textiles, and more; Housing Development Finance Corp. Ltd. (500010:BOM), a provider of housing finance; and Infosys Ltd. (500209:BOM), a provider of IT consulting and software services.
- Performance Over One-Year: 45.1%
- Expense Ratio: 0.82%
- Annual Dividend Yield: 0.18%
- Three-Month Average Daily Volume: 8,008
- Assets Under Management: $76.1 million
- Inception Date: Aug. 24, 2010
- Issuer: VanEck
GLIN tracks the MarketGrader India All-Cap Growth Leaders Index, comprised of companies with both growth potential and reasonable valuations. The fund is comprised mainly of large-cap companies. Materials, information technology, and healthcare account for about 76% of the fund's holdings.
The top holdings of GLIN include Infosys Ltd.; Wipro Ltd. (WIT), an information technology, consulting, and business process services company; and Ultratech Cement Ltd. (ULTRACEMCO.US), a cement company.
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