Powershares India Tiger ETF On the Way - But It's Nothing New

Roger Nusbaum submits: In case you missed it, PowerShares is going to roll out another 1107 new ETFs shortly (perhaps in my haste I miscounted), one of which will be the India Tiger Portfolio (filing).

This new fund could have some impact on IIF (reduced client holding) and IFN. Both CEFs trade at large premiums to NAV. The ETF will compete for some of the assets that might otherwise access India through the CEFs. If the ETF proves to be a better investment then the CEFs could be dramatically impacted.

The point is that there is visibility for the premiums to narrow as the ETF attracts capital.

UPDATE: From Aaron Pressman of BusinessWeek -- India ETF coming but don't get too excited:

turns out it's an index of just 18 Indian companies that trade here in the U.S. already, companies like Wipro and Rediff.com. That's not very exciting for a couple of reasons. First, you can already buy that slim segment of the Indian market. And second, it's not going to reflect the full Indian market. Finally and most importantly, just two companies -- Wipro and Infosys Technologies -- make up almost half of the weighting. That's a lot of concentration risk. So, I'd say the wait goes on for a true India index investment vehicle.

Thanks for the heads up Aaron.

Comments

[Asif Suria:]

I wonder what prompted them to give half the weighting to just Infosys and Wipro. Unless I am mistaken, out of the 18 only 12 are true ADRs while the rest are companies based in the US (Kanbay, Lionbridge, Covansys, iGATE, Syntel and Cognizant) who have significant offshore operations in India.

While I have nothing against IT consulting firms and have featured some of them in my newsletters (RCM Technologies, Wipro and Infosys), this index is very heavily weighted towards IT consulting firms.

2006 Jun 19 04:07 AM