Earlier this year, the investment world was buzzing with excitement over the reopening of China and its economy. Which led many to believe this was a promising bet for emerging market investments. However, as expectations for the Chinese economy have cooled in the short and long term, investors are now looking for other ways to invest in emerging markets.
India is one of those avenues that are attracting attention. Recently, India has become the world’s fifth largest economy and the most populous country. It also posted one of the best performing stock markets in the second quarter of 2023. In fact, some pundits and analysts have started to wonder if India could become the next China.
Several ETFs offer targeted exposure to India’s booming economy. In this article, we’ll dive into four of the most successful Indian ETFs, exploring their key features.
The best performing ETFs so far this year in India
THE Columbia India Consumer ETF (INCO) focuses on companies in the nation’s consumer industries. With an expense ratio of 0.75%, INCO posted a year-to-date return of 15.32% and a year-over-year return of 18.02%, showing positive growth and performance over the the last year. Its AUM stands at $91.0 million, which suggests it has a fairly well-established presence in the market. Targeting India’s growing consumer class and recording one of the highest year-to-date returns among Indian ETFs, INCO is an attractive option for investors.
THE Indian Internet & E-Commerce ETF (INQQ) focuses on companies in the e-commerce industry in India, tapping into the country’s consumer market in a similar way to INCO. However, with an expense ratio of 0.86%, this ETF is a more expensive option compared to INCO. Debuting just over a year ago, INQQ has an AUM of $5.1 million. The fund has seen positive net flows in the past month of $2.63 million, indicating heightened investor interest.
INQQ has a strong three-month return of 25.08% and a year-to-date return of 16.87%, indicating a very positive trajectory. With a focus on e-commerce industries, there is a strong potential growth opportunity for this ETF. Although a relatively new product and a small number of assets, INQQ offers attractive investment opportunities for investors who want exposure to a cross section of the Indian market.
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Other Indian ETFs
For investors looking for funds that have shown strong performance over a long period, the iShares MSCI India Small-Cap ETF (SMIN) and the WisdomTree India Income Fund (EPI) had the best three-year annualized returns among the India-focused ETF space.
SMIN offers investors exposure to a diversified portfolio of over 400 stocks. With an expense ratio of 0.74%, this ETF offers investors a cost-effective way to gain exposure to the Indian small cap market. These stocks may offer a different level of potential growth and volatility than products dominated by mega-cap stocks. Since its creation on February 8, 2012, SMIN has shown constant performance. It achieved a YTD return of 12.62% and an impressive three-year return of 25.33%. With an AUM of $274.8 million, this ETF attracted a significant amount of investor assets. For investors seeking exposure to the Indian economy through small cap stocks, SMIN presents an attractive investment option with its track record of performance and portfolio diversification.
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With an expense ratio of 0.84%, EPI is among the most expensive US-listed ETFs to target Indian markets. Since its inception on February 22, 2008, the fund has amassed $925.6 million in assets under management and is the second largest ETF to cover Indian stocks. Its underlying index methodology picks stocks primarily on earnings rather than market capitalization, meaning it targets companies that are making money rather than just focusing on company size. business.
This focus has paid off to some extent. EPI has had strong performance over the years, with a one-year return of 18.45% and a three-year return of 22.16%. With 15 years of trading, the fund has a well-established track record.
As investors seek to diversify their portfolios and capitalize on the potential growth of India’s emerging market, these Indian ETFs present attractive investment opportunities. Whether it’s consumer industries, e-commerce, small cap stocks or high income Indian stocks, each ETF offers a distinct investment proposition suited to different investment strategies.
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