India exchange-traded funds (ETFs) offer a way for investors to geographically diversify their global portfolios by owning a range of companies in the worlds second-most populous nation and one of the worlds largest emerging markets. India ETFs track the performance of a basket of equities trading on the National Stock Exchange of India (NSE). Some of Indias largest companies include India Oil Corp. (IOC), Bharat Petrol Corp. (BPCL), and Tata Motors Ltd. (TATAMOTORS). India has been heavily affected by the COVID-19 pandemic in recent months, and the country expects to receive millions of new doses of vaccine in August. The returns and risks in emerging-market economies can be high, and they have been heightened in India due to the pandemic.
- Indian equities outperformed the broader market over the past year.
- The India ETFs with the best 1-year trailing total return are SMIN, EPI, and NFTY.
- The top holding of each of these funds is SRF Ltd., Infosys Ltd., and Tech Mahindra Ltd., respectively.
There are 8 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 45.1% over the past 12 months compared to the S&P 500s total return of 34.0%, as of Aug. 12, 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 3 best India ETFs below. All numbers below are as of Aug. 13, 2021.
- Performance over 1-Year: 71.5%
- Expense Ratio: 0.81%
- Annual Dividend Yield: 0.09%
- 3-Month Average Daily Volume: 64,369
- Assets Under Management: $315.7 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 Indias securities market. The ETF provides diversified exposure to small public companies in India. The fund holds a relatively large portfolio of equities, which are concentrated predominantly within the materials, industrial, and financial sectors. The fund follows a blended strategy, investing in a mix of growth and value stocks. The funds top three holdings include SRF Ltd. (503806:BOM), a maker of industrial and specialty chemicals; Crompton Greaves Consumer Electricals Ltd. (539876:BOM), a maker of household appliances and other consumer products; and Mphasis Ltd. (526299:BOM), an IT services provider.
- Performance over 1-Year: 54.4%
- Expense Ratio: 0.84%
- Annual Dividend Yield: 0.70%
- 3-Month Average Daily Volume: 479,755
- Assets Under Management: $875.8 million
- 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 are eligible to be purchased by foreign investors. The ETF provides a valuation-centric approach to Indias 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 across hundreds of holdings. The funds top three holdings include Infosys Ltd. (500209:BOM), a provider of IT consulting and software services; Housing Development Finance Corp. Ltd. (500010:BOM), a provider of housing finance; and Reliance Industries Ltd. (500325:BOM), a manufacturer of petrochemicals, synthetic fibers, textiles, and more.
- Performance over 1-Year: 52.3%
- Expense Ratio: 0.80%
- Annual Dividend Yield: 0.36%
- 3-Month Average Daily Volume: 1,851
- Assets Under Management: $78.5 million
- Inception Date: Feb. 14, 2012
- Issuer: First Trust
NFTY is a large-cap fund which targets the NIFTY 50 Equal Weight Index. The index is an equally weighted collection of the 50 largest and most liquid securities listed on the National Stock Exchange of India. NFTY is a blended ETF, combining value and growth stocks. The financial, material, and consumer discretionary sectors have the largest holdings in the funds portfolio. The top holdings of the fund include Tech Mahindra Ltd. (532755:BOM), an IT and business processing outsourcing company; Tata Steel Ltd. (500470:BOM) a steel manufacturing company; and Bharti Airtel Ltd. (532454:BOM), a telecommunications services company.
The comments, opinions and analyses expressed herein are for informational purposes only and should not be considered individual investment advice or recommendations to invest in any security or to adopt any investment strategy. While we believe the information provided herein is reliable, we do not warrant its accuracy or completeness. The views and strategies described on our content may not be suitable for all investors. Because market and economic conditions are subject to rapid change, all comments, opinions, and analyses contained within our content are rendered as of the date of the posting and may change without notice. The material is not intended as a complete analysis of every material fact regarding any country, region, market, industry, investment, or strategy.
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