ETF Spotlight: India

Includes: EPI, ICN, INCO, INP, PIN
by: Tom Lydon

Policymakers in India are working hard to implement more stringent guidelines than seen over the past decade. Exchange traded funds focused on India are set to gain attention as the economy begins to build back up.

Monty Agarwal, managing partner and chief investment officer of MA Managed Futures Fund, says the government has taken bold steps to support the rupee by attracting foreign investments and cutting the budget deficit.

The rupee's recent strength over the U.S. dollar has helped push the economy into the upward momentum it needs to start growing again. The WisdomTree Dreyfus Indian Rupee ETF (NYSEARCA:ICN) is up about 5% year-to-date, reports Trang Ho for Investor's Business Daily. The recent announcement of QE3 by the Federal Reserve has helped push investors back into riskier assets.

The economy in India grew 5.5% over the first quarter and the fiscal deficit has grown 5.9% of GDP, reports Neena Mishra for Zacks. Previously, major ratings agencies and institutions have warned India of a credit downgrade, the first BRIC nation to lose an investment grade rating.

However, there are various fundamental reasons supporting an investment in India. Russ Koesterich for iShares explains that Indian shares are trading at low valuations. GDP is expected to grow at an annualized rate of 6.4%. Investors are underinvested in India relative to other emerging markets, which should boost prices if investor confidence returns.

ETFs for investment in India:

  • PowerShares India Portfolio (NYSEARCA:PIN) up 11% year-to-date
  • iPath MSCI India Index ETN (NYSEARCA:INP) up 19% year-to-date
  • Market Vectors India Small Cap Index ETN (NYSEARCA:INCO) up 26% year-to-date
  • WisdomTree India Earnings Fund (NYSEARCA:EPI) up 17% year-to-date

WisdomTree India Earnings Fund

(Click to enlarge)

Tisha Guerrero contributed to this article.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.