Barclays Global Investors announced on Friday the launch of the iShares S&P India Nifty Fifty Index Fund (INDY), a new ETF tracking an index composed of the 50 largest and most liquid Indian securities listed on the National Stock Exchange of India. INDY will compete with several existing India exchange-traded funds, including products from iPath, WisdomTree, and PowerShares. “We’re pleased to provide investors with an iShares ETF that tracks one of the most investable and well-known India indexes,” said Noel Archard, head of U.S. iShares Product Research and Development. “Demand for Indian equities continues to be strong as India has a differing set of companies and industries.”
The S&P CNX Nifty Index has a median market capitalization of almost $9 billion and big allocations to energy giant Reliance Industries and IT consulting firm Infosys. These two companies will make up for about 20% of INDY’s holdings at inception.
INDY will be well-diversified across major sectors of the Indian economies, allocating no more than 20% of holdings to a single industry (see the PDF fact sheet here). The new ETF will charge an expense ratio of 0.89%, making it competitive with existing India ETFs. For news on all new ETF launches, sign up for our free ETF newsletter.
Emerging market ETFs have seen huge cash inflows this year as appetite for risk has returned and investors spooked by lingering troubled for the American economy have looked to diversify their portfolios beyond the U.S. Through October of this year 30% of iShares total net asset flows, or $9.8 billion, has gone into emerging market and single emerging countries.
In addition to the new iShares fund, there are several diversified BRIC and emerging markets ETFs that include significant allocations to India. There are also three funds that focus exclusively on Indian equities:
- iPath MSCI India Index ETN (INP): This exchange-traded note is linked to the MSCI India Index, a benchmark that seeks to represent approximately 85% of the free-float-adjusted market capitalization of equity securities by industry group within India. Similar to the new iShares fund, the index underlying INP makes significant allocations to Reliance and Infosys. It is important to note that INP is an ETN, meaning that investors are exposed to some degree of credit risk.
- WisdomTree India Earnings Fund (EPI): This ETF is based on the WisdomTree India Earnings Index, a benchmark that measures the performance of profitable companies listed in India. Companies in the index are weighted on their earnings in the prior fiscal year, thereby avoiding exposure to companies with big losses (and potentially introducing a tilt towards value stocks). EPI is up nearly 90% year-to-date.
- PowerShares India Portfolio (PIN): This ETF tracks the Indus India Index, a benchmark with 50 constituents spread across the technology, health services, financial services, heavy industry, and consumer products sectors. About 21% of this fund’s holdings are in Reliance and Infosys. PIN charges an expense ratio of 78 basis points, making it the cheapest way to gain exposure to India equities (see a complete list of the cheapest ETFs here).
Explore INDY further on ETFdb:
Disclosure: No positions at time of writing.