Home etftrends.com Beyond China: Evaluating India as an Emerging Market

Beyond China: Evaluating India as an Emerging Market

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As the effects of the Covid-19 pandemic start to wane and economies begin to recover, investors will be looking for additional international diversification, which includes emerging markets (EM).

One country to consider is India–currently the 5th largest economy in the world.

Per a recent CNBC article, “Indian stocks have been outperforming other emerging markets for nearly six months and could continue to do so if supportive measures are in place, according to Morgan Stanley. The outperformance began in April but the market’s short-term performance remains hinged to global factors, the U.S. investment bank said in a Oct. 9 report.”

“We have been arguing that for this outperformance to be sustained, India needs to continue to deliver policy that lifts India’s potential growth in the eyes of market participants,” Ridham Desai, equity strategist, and Sheela Rathi, equity analyst, said in the report.

One ETF to review is the VanEck Vectors India Growth Leaders ETF (GLIN). The fund seeks to replicate as closely as possible, before fees and expenses, the price and yield performance of the MarketGrader India All-Cap Growth Leaders Index.

GLIN YTD Performance

GLIN YTD Performance

The fund invests substantially all of its assets in the Subsidiary, a wholly-owned subsidiary located in the Republic of Mauritius. The index is comprised of equity securities which are generally considered by the index provider to exhibit favorable fundamental characteristics according to the index provider’s proprietary scoring methodology.

Helping GLIN’s case are  “three factors [that]have helped India’s strong performance: an improving policy environment, corporate response to the pandemic and ‘an attractive starting point of valuations,’ the bank said.”

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How to Get Broad Market ETF Exposure in India

Investors looking broad-based exposure to India can use the iShares MSCI India ETF (CBOE: INDA). INDA seeks to track the investment results of the MSCI India Index composed of Indian equities, which measures the performance of equity securities of companies whose market capitalization, as calculated by the index provider, represents the top 85% of companies in the Indian securities market.

Short-term traders looking for leverage can use the Direxion Daily MSCI India Bull 3x ETF (NYSEArca: INDL). INDL seeks daily investment results equal to 300% of the daily performance of the MSCI India Index, which is designed to measure the performance of the large- and mid-capitalization segments of the Indian equity market, covering approximately 85% of the Indian equity universe.

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