Our Take: Van Eck's new India Small Cap ETF is appealing since with good demographics and a growing economy exposure to the consumer sector is promising. Small Cap issues generally are dominated by consumer oriented issues. Therefore, we like the potential here.
New York-based asset manager Van Eck Global has launched Market Vectors India Small-Cap Index ETF (NYSE Arca: SCIF), an open-end exchange-traded fund (ETF) to provide investors with exposure to small-cap stocks in India, it was announced today. The fund will seek to track the Market Vectors(NYSE:TM) India Small-Cap Index, which had a large base of 122 constituents and an average market capitalization of $456M, as of July 31, 2010.
"We are very excited to add SCIF to our growing lineup of emerging market small-cap ETFs," said Jan van Eck, Principal at Van Eck Global. "It continues to be our strong belief that small-cap stocks are an excellent way to gain direct exposure to a country's domestic economy. India, in particular, has exhibited demographic and economic factors that support strong continued domestic growth for years to come."
Since undertaking economic liberalization policies in 1991, India has achieved significant economic growth and has quickly integrated into the global marketplace. The country's gross domestic product (OTC:GDP) has remained strong in recent years, with real GDP growth registering 7.3 percent in 2008 and 5.6 percent in 2009, two years in which most Asian economies contracted.
Indian small-cap stocks are supported by one of the world's largest and fastest-growing domestic consumer markets, with a demographic profile that is skewed toward the young. India's rapidly growing middle class is projected to triple in size over the next 15 years, making it twice the size of the entire U.S. population. With sustained foreign direct investment in previous years and continued decreases in unemployment, growing wealth among India's population is expected to fuel demand for discretionary goods, services and homebuilding. In addition, India's government has already invested substantial amounts in the country's much needed infrastructure build-out, which has served as a fiscal stimulus further driving the country's economic growth.
SCIF seeks to replicate as closely as possible, before fees and expenses, the price and yield performance of the Market Vectors India Small-Cap Index (Ticker: MVSCIFTR), which uses a float-adjusted modified market capitalization-weighting methodology. The top three industry weightings in the Index as of July 31, 2010 were Industrials (27%), Financials (20%) and Materials (14%). The Fund's net expense ratio is 0.85% percent and its gross expense ratio is 0.91% percent.
Like all Market Vectors indices provided by 4asset-management GmbH, MVSCIFTR's constituents and weights are publically available daily at no cost and constituents must meet minimum liquidity levels to be considered for inclusion in the index. Specifically, companies must have a market cap of at least $150 million, a three-month average daily trading volume value of at least $1 million and minimum trading volume of 250,000 shares each month over the last 6 months on a rebalancing date.
SCIF is the 27th ETF offered under Van Eck's Market Vectors(TM) brand. Other international Market Vectors ETFs include Africa Index ETF (NYSEARCA:AFK), Brazil Small-Cap ETF (NYSEARCA:BRF), Egypt Index ETF (NYSEARCA:EGPT), Gulf States Index ETF (NYSEARCA:MES), Indonesia Index ETF (NYSEARCA:IDX), Latin America Small-Cap Index ETF (NYSEARCA:LATM), Poland ETF (NYSEARCA:PLND), Russia ETF (NYSEARCA:RSX), and Vietnam ETF (NYSEARCA:VNM). Market Vectors also offers ETFs focused on hard assets, specialty investments, and fixed income. As of July 31, 2010, Van Eck was the6th largest ETF provider in the U.S. and had approximately $14.3 billion in assets under management.
About Van Eck Global
Founded in 1955, Van Eck Associates Corporation was among the first U.S. money managers helping investors achieve greater diversification through global investing. Today the firm continues this 50+ year tradition by offering global investment choices in hard assets, emerging markets, precious metals including gold, and other specialized asset classes.
Market Vectors exchange-traded products have been offered by Van Eck Global since 2006 when the firm launched the nation's first gold mining ETF. Today, Market Vectors ETFs and ETNs span several asset classes, including equities, municipal bonds and currency markets.
Van Eck Global also offers mutual funds, insurance trust funds, separate accounts and alternative investments. Designed for investors seeking innovative choices for portfolio diversification, Van Eck Global's investment products are often categorized in asset classes having returns with low correlations to those of more traditional U.S. equity and fixed income investments.