“What happens in India has a big impact, both in the region and in the world,” Luis Breuer, senior resident representative to India at IMF, said in a recent podcast. “So, when you talk about India, you're talking about a large slice of humanity and the global economy.”
India is a land of diversity with many different types of cultures, languages, religions, ethnicities, geographical features and climates. The country is currently the world’s sixth largest economy and one of the fastest-growing trillion-dollar economies in the world. India’s economy is expected to clock a growth of 9% in 2022, maintaining the recovery momentum after the sharp contraction in 2020 (IMF, January 2022). The country’s growth is projected to be at 7.1% for 2023.
According to the IMF, “India’s prospects for 2023 are marked up on expected improvements to credit growth—and, subsequently, investment and consumption—building on better-than-anticipated performance of the financial sector.”
India’s economy is backed by strong macroeconomic fundamentals, fiscal discipline, high saving rates, robust domestic demand and demographic trends. According to an IHS Market Report, India’s nominal GDP will rise from $2.7 trillion in 2021 to $8.4 trillion by 2030. This expansion will help India overtake economies such as Japan by 2030, making India the second largest economy in the Asia-Pacific region. India would have surpassed economies such as Germany and the United Kingdom in terms of GDP size as well by then.
India is primarily a consumption-led economy with exports contributing less than 20% to its GDP. Over the years, the rising middle class and corresponding shift in spending pattern has strengthened its consumption trend. India’s consumption growth will be supported by a 1.4 billion strong population that is younger than that of any other major economy. India’s household savings have historically been high and “this buffer provides support to domestic consumption expenditure even through challenging cycles in economic activity,” reads a World Economic Forum report.
Here's a list of the top Indian Exchange-Traded Funds (ETFs).
iShares MSCI India ETF (INDA)
Launched in February 2012, iShares MSCI India ETF is the largest ETF in terms of assets under management (AUM) providing exposure to India. INDA has a portfolio of 107 Indian companies from the large-and mid-cap space. The sectors—financials and information technology—currently add to 42.64%. The fund is benchmarked against the MSCI India Index and has a beta of 0.93. INDA has $5.78 billion as AUM and an expense ratio of 0.65%. The top ten stock holdings add up to around 46%.
- Reliance Industries Limited
- Infosys Limited (INFY)
- Housing Development Finance Corporation Limited
- ICICI Bank Limited (IBN)
- Tata Consultancy Services Limited
- Bajaj Finance Limited
- Hindustan Unilever Limited
- Axis Bank Limited
- Bharti Airtel Limited
- Larsen and Toubro Limited
WisdomTree India Earnings Fund (EPI)
WisdomTree India Earnings Fund is a 14-year-old fund offering a diversified portfolio of companies across the market cap. The fund follows a valuation-centric approach to investing. The top four sectoral allocations of the fund currently are financials, energy, materials and information technology, which add up to 71%. The top ten holdings constitute 35.64% of the portfolio. EPI manages assets to the tune of $905 million and has an expense ratio of 0.84%.
- Reliance Industries Limited
- Infosys Limited (INFY)
- Housing Development Finance Corporation Limited
- ICICI Bank Limited (IBN)
- Tata Consultancy Services Limited
- NTPC Limited
- Power Grid Corporation of India Limited
- Larsen & Toubro Limited
- Oil & Natural Gas Corporation Limited
- Indian Oil Corporation Limited
iShares India 50 ETF (INDY)
iShares India 50 ETF is the third largest India-centric ETF. The fund provides a single window for U.S. investors to the top 50 companies that constitute India’s popular benchmark index—Nifty 50. INDY is a passive way to add the top Indian companies to one’s portfolio. The fund was launched in 2009 and currently has $675.45 million as AUM and an expense ratio of 0.90%. The top ten constituents dominate 60% of the portfolio allocations.
- Reliance Industries Limited
- HDFC Bank Limited (HDB)
- Infosys Limited (INFY)
- ICICI Bank Limited (IBN)
- Housing Development Finance Corporation Limited
- Tata Consultancy Services Limited
- Kotak Mahindra Bank Limited
- Larsen and Toubro Limited
- Hindustan Unilever Limited
In addition to the above, there are other ETFs, which include:
- iSharesMSCI India Small-Cap ETF (SMIN)
- Invesco IndiaETF (PIN)
- Columbia India ConsumerETF (INCO)
- VanEck India Growth LeadersETF (GLIN)
- First Trust IndiaNIFTY 50 Equal Weight ETF (NFTY)
- FranklinFTSE India ETF (FLIN)
- Nifty India FinancialsETF (INDF)
- WisdomTree India ex-State-Owned Enterprises Fund (IXSE)
In addition to ETFs, investors can invest in select Indian companies traded on the U.S. exchanges as American Depository Receipts (ADRs).
Disclaimer: The author has no position in any stocks mentioned. Investors should consider the above information not as a de facto recommendation, but as an idea for further consideration. The report has been carefully prepared, and any exclusions or errors in it are totally unintentional. Scheme data and details based on factsheet from respective websites as on February 15, 2022.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
Prableen Bajpai
Prableen Bajpai is the founder of FinFix Research and Analytics which is an all women financial research and wealth management firm. She holds a bachelor (honours) and master’s degree in economics with a major in econometrics and macroeconomics. Prableen is a Chartered Financial Analyst (CFA, ICFAI) and a CFP®.
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