Why I'm Closing India Fund

In my continued quest to streamline, I've decided to close out a long held position in the India Fund (IFN) which is a closed end fund that has along with 1 peer had been the only way to buy a collection of India stocks for most of the past half decade; some new instruments have been introduced the past 12 months. [Mar 6: 2 New ETFs for "India Bugs"]

Still love India over the next few decades, but as I chart India Fund vs. some of the Indian banks I show, I see very similar patterns so it's sort of a moot point to own both. Below is a 6 month chart of the index ETF versus the 2 Indian banks I own, and then below that is a 12 month chart. The 3 month chart is similar (but now shown).

Further, I follow the banks and their stocks much more than the ETF which sort of sits at the bottom of the portfolio as a 0.5-1.0% type of position most of the time. So as I move to remove redundancy I've decided to sell this, even as the chart is actually looking quite positive in the near term. I sold out at $51.80s.

Even though the 6 month return is negative 20%, I've had some very good timing with my buys of India [Oct 26: India Up, China Down? Changing my Indian Focus] so despite a small stake and never overweighting this position I've been able to get a +$4000 return by selling when it was up, and buying on pullbacks. This has been a position (since the fund began) where the only way to make money is trading. That said, Indian stocks have had a great rise if you go back a few years... I just started the fund at the inopportune time for "buy and hold".

This position was started on day one of the fund... I'll focus on the banks for now and continue to wish that India, like Brazil, offers more companies direct to American investors.

I am now back to my preferred 55 long positions (63 total)

Disclosure: Long Indian banks in fund; no personal position

Comments

[TVelu]

I feel it's less riskier to own a basket of indian stocks(IFN) rather owning few bank stocks.

[Indiguy007]

I agree with TVelu's comment. Just owning 2 banks doesn't mean you own the entire Indian market. Why do you think that only those 2 banks compared to other companies make more sense to buy?.... I wish you had shared your insight with us. FYI, there are several other Indian ADR's listed on NYSE.

[Mittal_911]

Trader Mark, find out the capital gains distribution by IFN in the peroid of plot, and you may be surprised with the revised plot!

[brijsrivastava]

I totally agree with Trader Mark.

[User 163394]

I own EMGIX and am hoping it will come back since it's down over 35 percent from its high. I keep reading about the mobile phone industry in India is second only to China. Does anyone know of a way to invest in mobile phones in India, like CHL in China.

[User 194150]

Mittal_911 is absolutely right. IFN pays ~9% in dividends. I find this position a great hold, you not only are exposed to India, which at some point will explode and grow big time, but you also get a good yield.

[Halibut]

Yes, I agree with Mittal 911. The author clearly did not to a proper analysis. If you do a total return analysis over a 1yr and 2yr period, here are the results: IFN 1yr = 41.4%, 2 yr = 10.5%. looking at the bank ICICI; IBN 1yr = -5.11, 2yr = 56.91%. Clearly these are NOT showing a similar pattern.