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 in 2020 due to the ongoing pandemic and the negative impact it is having on the global economy. In early October, the World Bank forecast that India GDP will plunge 9.6% in the fiscal year that began in March of 2020.
- India ETFs significantly underperformed the broader market over the past year.
- India ETFs with the best 1-year trailing total return are PIN, SMIN, and INDA.
- The top holdings of these ETFs are Infosys Ltd., Apollo Hospitals Enterprise Ltd., and Reliance Industries Ltd., respectively.
The India ETF universe is comprised of 6 ETFs, excluding inverse, leveraged, and other ETFs with less than $50 million in assets under management (AUM). Note that these funds target Indian stocks rather than bonds. As of October 29, 2020, the MSCI India Index, a benchmark for this group of funds, had a 1-year trailing total return of -2.0%, far underperforming the S&P 500's 1-year trailing total return of 9.4%. The best-performing India ETF for Q1 2021 is the Invesco India ETF (PIN). Below, we'll take a look at the top 3 India ETFs as measured by 1-year trailing total returns. All numbers in this story, other than the benchmark indexes above, are as of November 2, 2020.
- 1-Year Trailing Total Returns: -0.7%
- Expense Ratio: 0.82%
- Annual Dividend Yield: 28.71%
- 3-Month Average Daily Volume: 16,841
- Assets Under Management: $91.7 million
- Inception Date: March 5, 2008
- Issuing Company: Invesco
PIN is a large-cap ETF that follows a blended strategy of investing in a mix of value and growth stocks. PIN closely tracks the Indus India Index, which is comprised of 50 of India's biggest companies in sectors such as information technology, health services, financial services, heavy industry, and consumer products. The ETF holds multiple stocks at double-digit percentages in its portfolio. The ETF's top three holdings include Infosys Ltd. (INFO:INC), a consulting and software services company; Reliance Industries Ltd. (RIL:INC), a manufacturer of petrochemicals, synthetic fibers, and textiles; and Housing Development Finance Corp. Ltd. (HDFC), a provider of housing finance.
- 1-Year Trailing Total Returns: -2.0%
- Expense Ratio: 0.76%
- Annual Dividend Yield: 2.31%
- 3-Month Average Daily Volume: 38,305
- Assets Under Management: $191.6 million
- Inception Date: February 8, 2012
- Issuing Company: iShares
SMIN is a blended fund targeting the MSCI India Small Cap Index. The index tracks a portfolio of companies representing the bottom 14% of the Indian securities market by market capitalization. The portfolio includes consumer discretionary, financial, and industrial companies. SMIN holds about 240 companies. The fund's top three holdings include Apollo Hospitals Enterprise Ltd (APHS:IN), a chain of hospitals; Crompton Greaves Consumer Electricals Ltd. (539876:BSE), a maker of consumer products and appliances; and Balkrishna Industries Ltd. (BIL:INC), a maker of automotive products.
- 1-Year Trailing Total Returns: -3.6%
- Expense Ratio: 0.69%
- Annual Dividend Yield: 0.32%
- 3-Month Average Daily Volume: 3,910,229
- Assets Under Management: $3.2 billion
- Inception Date: February 2, 2012
- Issuing Company: iShares
INDA is a large-cap ETF that follows a blended strategy, investing in a mix of value and growth stocks. The fund is comprised of about 70 different components and tracks the MSCI India Index. INDA has one of the cheapest expense ratios among India ETFs, and may attract cost-conscious, buy-and-hold investors. The ETF's top three holdings include Reliance Industries, Infosys, and Housing Development Finance.