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India ETFs Riding the Wave of Economic Transformation
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According to Forbes, per the data released by the Indian government, growth in the country’s GDP reached a staggering 7.2% in 2023. The growth witnessed by the world’s most populated country is higher than that of the United States, China, Indonesia and the UK, among others. With its GDP reaching $3.75 trillion in 2023, up from approximately $2 trillion in 2014, India has ascended from the 10th largest to the 5th largest economy globally.
India’s government attributes the GDP surge to micro, small and medium enterprises schemes, coal mining growth, cashless payments, higher electricity consumption, increased railway freight, start-up boom, and record-breaking exports.
Country’s Growth Forecast
In a recent monetary policy committee meeting, the Reserve Bank of India unveiled its GDP growth forecast for the current fiscal year, expecting a solid expansion of 6.5 %. Moody's Analytics, a U.S.-based financial services company, projects a slightly lower growth rate of 6-6.3 % for the June quarter.
Per the Centre for Economics and Business Research, India could take over Germany as the world's fourth-largest economy by 2026 and surpass Japan to reach the third position by 2032, if its current momentum continues.
Opportunities Due to Population Surge and Geopolitics
India surpassing China as the most populous country has sparked interest in its potential to utilize its demographic advantage to compete with China in various aspects. Increasing number of workforce is another reason for taking a bet on the country.
According to CNN, investing in India presents a compelling opportunity with a population of around 1.4 billion. A shift in the geopolitical factors, with increasing tensions between Washington and China, political and economic strategy of India fits seamlessly like a puzzle piece. The growing tilt toward global diversification and as western leader’s intention to strengthen economic ties with nations that uphold shared values bode well for India’s economy.
Indian government’s aims to enhance its industrial sector and boost exports through the signing of free trade deals, which have garnered positive reception globally.
Amidst declining trade with the west following its Ukraine invasion, Russia displays interest in strengthening relations with India. Additionally, the United States and India have recently taken measures to reinforce ties, specifically in defense and technology domains.
Let’s Dive Into Data Further
India's central bank, as expected, kept the key lending rate unchanged at 6.50% in its latest policy meeting,as quoted on Reuters. However, it signaled a continuation of tight monetary conditions to address inflationary pressures. In contrast to other central banks, India has maintained a policy stance of "withdrawal of accommodation" to align inflation with targets while supporting economic growth.
The committee anticipates increased investment activity due to higher capital expenditure, moderating commodity prices, and strong bank credit growth. Nevertheless, the growth outlook may be at risk from weak global demand.
According to an article on Reuters, economists note that India’s trade deficit reached a five-month high in May due to a rise in merchandise imports, which suggests a stable local economy. The growth in imports, particularly of industrial goods and consumer goods, indicates the resilience of domestic demand. Despite the widening trade deficit, economists maintain expectations of a manageable current account deficit for the financial year.
ETFs in Focus
Below, we highlight a few ETFs that can help you to diversify your portfolio and tap into the Indian markets. With promising growth potential and growing integration into the global economy, India continues to be a compelling investment opportunity.
The WisdomTree India Earnings ETF tracks the results of the WisdomTree India Earnings Index. With a basket of 417 securities and an asset base of $869.61 million, the fund charges an annual fee of 0.84%.
EPI has major allocations to materials (24.01%), energy (17.63%), financials (15.96%) and information technology (11.3%). WisdomTree India Earnings ETF has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook, generating 17.32% over the past year and 10.07% in the last three months.
The iShares India 50 ETF seeks to track the investment results of the Nifty 50 Index, which comprises the top 50 companies by market capitalization in the Indian markets. The fund has a basket of 50 securities and commands an asset base of $597.32 million. The fund charges an annual fee of 0.89%
INDY has major allocations to financials (37.01%), information technology (12.59%) and energy (12.27%). It has a Zacks ETF Rank #3 with a Medium risk outlook. iShares India 50 ETF has earned 13.67% over the past year and 9.74% in the last three months.
The iShares MSCI India ETF seeks to track the performance of the MSCI India Index, which comprises companies whose market capitalization represents the top 85% of companies in the Indian securities market. With a basket of 114 securities and an asset base of $4.89 billion, the fund charges an annual fee of 0.64%.
INDA has major allocations to financials (26.30%), information technology (13.01%) and energy (12.04%). It has a Zacks ETF Rank #3 with a Medium risk outlook. iShares MSCI India ETF has earned 11.14% over the past year and 11.66% in the last three months.
The VanEck India Growth Leaders ETF seeks to replicate the performance of the MarketGrader India All-Cap Growth Leaders Index, which consists of fundamentally sound Indian companies that exhibit attractive growth potential at a reasonable price. The fund has gathered an asset base of $53.77 million. GLIN charges an annual fee of 0.80%.
GLIN has major allocations to information technology (24%), financials (20.14%) and industrials (13.72%). It has a Zacks ETF Rank #3 and has earned 16.12% over the past year and 13.5% in the last three months.
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India ETFs Riding the Wave of Economic Transformation
According to Forbes, per the data released by the Indian government, growth in the country’s GDP reached a staggering 7.2% in 2023. The growth witnessed by the world’s most populated country is higher than that of the United States, China, Indonesia and the UK, among others. With its GDP reaching $3.75 trillion in 2023, up from approximately $2 trillion in 2014, India has ascended from the 10th largest to the 5th largest economy globally.
India’s government attributes the GDP surge to micro, small and medium enterprises schemes, coal mining growth, cashless payments, higher electricity consumption, increased railway freight, start-up boom, and record-breaking exports.
Country’s Growth Forecast
In a recent monetary policy committee meeting, the Reserve Bank of India unveiled its GDP growth forecast for the current fiscal year, expecting a solid expansion of 6.5 %. Moody's Analytics, a U.S.-based financial services company, projects a slightly lower growth rate of 6-6.3 % for the June quarter.
Per the Centre for Economics and Business Research, India could take over Germany as the world's fourth-largest economy by 2026 and surpass Japan to reach the third position by 2032, if its current momentum continues.
Opportunities Due to Population Surge and Geopolitics
India surpassing China as the most populous country has sparked interest in its potential to utilize its demographic advantage to compete with China in various aspects. Increasing number of workforce is another reason for taking a bet on the country.
According to CNN, investing in India presents a compelling opportunity with a population of around 1.4 billion. A shift in the geopolitical factors, with increasing tensions between Washington and China, political and economic strategy of India fits seamlessly like a puzzle piece. The growing tilt toward global diversification and as western leader’s intention to strengthen economic ties with nations that uphold shared values bode well for India’s economy.
Indian government’s aims to enhance its industrial sector and boost exports through the signing of free trade deals, which have garnered positive reception globally.
Amidst declining trade with the west following its Ukraine invasion, Russia displays interest in strengthening relations with India. Additionally, the United States and India have recently taken measures to reinforce ties, specifically in defense and technology domains.
Let’s Dive Into Data Further
India's central bank, as expected, kept the key lending rate unchanged at 6.50% in its latest policy meeting,as quoted on Reuters. However, it signaled a continuation of tight monetary conditions to address inflationary pressures. In contrast to other central banks, India has maintained a policy stance of "withdrawal of accommodation" to align inflation with targets while supporting economic growth.
The committee anticipates increased investment activity due to higher capital expenditure, moderating commodity prices, and strong bank credit growth. Nevertheless, the growth outlook may be at risk from weak global demand.
According to an article on Reuters, economists note that India’s trade deficit reached a five-month high in May due to a rise in merchandise imports, which suggests a stable local economy. The growth in imports, particularly of industrial goods and consumer goods, indicates the resilience of domestic demand. Despite the widening trade deficit, economists maintain expectations of a manageable current account deficit for the financial year.
ETFs in Focus
Below, we highlight a few ETFs that can help you to diversify your portfolio and tap into the Indian markets. With promising growth potential and growing integration into the global economy, India continues to be a compelling investment opportunity.
WisdomTree India Earnings Fund (EPI - Free Report)
The WisdomTree India Earnings ETF tracks the results of the WisdomTree India Earnings Index. With a basket of 417 securities and an asset base of $869.61 million, the fund charges an annual fee of 0.84%.
EPI has major allocations to materials (24.01%), energy (17.63%), financials (15.96%) and information technology (11.3%). WisdomTree India Earnings ETF has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook, generating 17.32% over the past year and 10.07% in the last three months.
iShares India 50 ETF (INDY - Free Report)
The iShares India 50 ETF seeks to track the investment results of the Nifty 50 Index, which comprises the top 50 companies by market capitalization in the Indian markets. The fund has a basket of 50 securities and commands an asset base of $597.32 million. The fund charges an annual fee of 0.89%
INDY has major allocations to financials (37.01%), information technology (12.59%) and energy (12.27%). It has a Zacks ETF Rank #3 with a Medium risk outlook. iShares India 50 ETF has earned 13.67% over the past year and 9.74% in the last three months.
iShares MSCI India ETF (INDA - Free Report)
The iShares MSCI India ETF seeks to track the performance of the MSCI India Index, which comprises companies whose market capitalization represents the top 85% of companies in the Indian securities market. With a basket of 114 securities and an asset base of $4.89 billion, the fund charges an annual fee of 0.64%.
INDA has major allocations to financials (26.30%), information technology (13.01%) and energy (12.04%). It has a Zacks ETF Rank #3 with a Medium risk outlook. iShares MSCI India ETF has earned 11.14% over the past year and 11.66% in the last three months.
VanEck India Growth Leaders ETF (GLIN - Free Report)
The VanEck India Growth Leaders ETF seeks to replicate the performance of the MarketGrader India All-Cap Growth Leaders Index, which consists of fundamentally sound Indian companies that exhibit attractive growth potential at a reasonable price. The fund has gathered an asset base of $53.77 million. GLIN charges an annual fee of 0.80%.
GLIN has major allocations to information technology (24%), financials (20.14%) and industrials (13.72%). It has a Zacks ETF Rank #3 and has earned 16.12% over the past year and 13.5% in the last three months.