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 (NSE). This allows investors to benefit from India's economy, which until the COVID-19 pandemic had expanded faster than many developed nations in recent years. Some of India's largest companies include India Oil Corp. (IOC), Bharat Petrol Corp. (BPCL), and Tata Motors Ltd. (TATAMOTORS). Both the returns and risks in emerging-market economies can be high. The risks may be especially heightened due to the ongoing pandemic and the negative impact it is having on the global economy. In January 2021, the International Monetary Fund estimated that India's economy contracted 8.0% in 2020. However, the IMF also forecasts that the Indian economy will bounce back in 2021 with a growth rate of 11.5%.
- India ETFs outperformed the broader market over the past year.
- The India ETFs with the best 1-year trailing total return are EPI, PIN, and SMIN.
- The top holding of the first two ETFs is Housing Development Finance Corp. Ltd., and the top holding of the third fund is Voltas Ltd., respectively.
There are 7 India ETFs that trade in the U.S., 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 22.5% over the past 12 months compared to the S&P 500's total return of 19.7%, as of February 9, 2021. The best-performing India ETF, based on performance over the past year, is the WisdomTree India Earnings Fund (EPI). We examine the top 3 best India ETFs below. All numbers below are as of February 10, 2021.
- Performance over 1-Year: 28.0%
- Expense Ratio: 0.84%
- Annual Dividend Yield: 0.73%
- 3-Month Average Daily Volume: 788,070
- Assets Under Management: $772.3 million
- Inception Date: February 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 are 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 market capitalization. It focuses on large-cap companies across the Indian economy, with financials, information technology, and materials among the sectors receiving the largest allocations. The fund's top three holdings include Housing Development Finance Corp. Ltd. (500010:BOM), a provider of housing finance; Infosys Ltd. (500209:BOM), a provider of IT consulting and software services; and Reliance Industries Ltd. (500325:BOM), a manufacturer of petrochemicals, synthetic fibers, textiles, and more.
- Performance over 1-Year: 25.5%
- Expense Ratio: 0.78%
- Annual Dividend Yield: 0.68%
- 3-Month Average Daily Volume: 32,456
- Assets Under Management: $113.8 million
- Inception Date: March 5, 2008
- Issuer: Invesco
PIN tracks the FTSE India Quality And Yield Select Index, which is comprised of securities in the FTSE India Index, excluding those securities in the bottom 10% based on 12-month trailing dividend yield and then from that group is excluded the bottom 10% of securities based on a quality metric score. The ETF typically invests a minimum of 90% of its total assets in securities that comprise the index. The majority of its 138 holdings operate within the information technology, financials, and energy sectors of the Indian economy. The fund's top three holdings include Housing Development Finance Corp.; Infosys; and Reliance Industries.
- Performance over 1-Year: 23.1%
- Expense Ratio: 0.81%
- Annual Dividend Yield: 0.98%
- 3-Month Average Daily Volume: 43,576
- Assets Under Management: $245.2 million
- Inception Date: February 8, 2012
- Issuer: iShares
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 majority of its 237 holdings operate within the financials sector, followed by the industrials and materials sectors. The fund follows a blended strategy, investing in a mix of growth and value stocks. It may exhibit significant amounts of volatility but also offers tremendous long-term growth potential. The fund's top three holdings include Voltas Ltd. (500575:BOM), a provider of engineering solutions that specializes in air conditioning and cooling technology; Crompton Greaves Consumer Electricals Ltd. (539876:BOM), a manufacturer of consumer electrical products; and Cholamandalam Investment and Finance Co. Ltd. (511243:BOM), a financial and investment services provider.
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