EGShares, the only U.S.-based ETF issuer focusing exclusively on emerging markets funds, announced the latest addition to its suite of products targeting the developing world this week. The new India Consumer ETF (INCO) will seek to replicate the INDXX India Consumer Index, a 30-stock composite of companies listed on India’s National Stock Exchange and Bombay Stock Exchange that are engaged in various consumer-focused industries. INCO is the first ETF to offer targeted exposure to this corner of the Indian stock market, a segment of the fast growing economy that often receives relatively minor allocations in broad-based India ETFs. Products such as the WisdomTree India Earnings Fund (EPI) and MSCI India Index ETN (INP), for example, tend to tilt exposure towards the energy and financial sector and away from industries such as health care and telecom.
While the new ETF is concentrated on India’s consumer sector, exposure is spread across a number of different types of companies. Sub-sectors represented in the index underlying INCO include automobiles (15%), personal products (15%), media (10%), textiles (10%), food products (9%), and beverages (7%). At the end of the second quarter, the largest allocations went to Hindustan Unilever, Asian Paints Ltd., and Dabur India Ltd [see more on INCO's Fact Sheet].
Consumer Exposure In Emerging Markets
As emerging market populations continue to gravitate towards urban areas and increase their discretionary incomes, interest in tapping into the consumer segment of the market has increased significantly. INCO is one of a number of products offering exposure to emerging markets consumer companies. The new ETF joins EGShares’ popular ECON, which offers exposure to the consumer sector in a number of developing economies including India, China, Mexico, and Brazil. The company also recently introduced ETFs focusing specifically on consumer goods (GGEM) and consumer services (VGEM) companies in emerging markets [see Five ETFs To Look Forward To].
“INCO is designed for investors who believe that India will experience significant consumer spending growth and want access to consumer companies that may be well-positioned to benefit from that growth,” said Robert C. Holderith, EGA’s founder and president. “We believe that INCO’s portfolio companies all have strong local brands, which could be beneficial as Indian consumers have continuously shown a preference for domestic brands over foreign imports.”
INCO is one of seven U.S.-listed ETFs offering pure play exposure to the Indian stock market. In addition to funds focusing on large cap Indian stocks, both EGShares (SCIN) and Van Eck (SCIF) offer products targeting India’s small cap sector. EGShares also offers an India Infrastructure ETF (INXX) that includes engineering, construction, and utilities firms that stand to benefit from ongoing expansion of India’s aggressive infrastructure campaigns [Can India ETFs Beat Inflation Epidemic?].
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Disclosure: No positions at time of writing, photo is courtesy of Remi Boissonnas.