Emerging markets have taken center stage in recent years as investors have become increasingly attracted to the lucrative opportunities presented in this corner of the market. India has long been a point of interest for investors, leading to the creation of numerous ETFs to allow simplified access to this diverse economy. Two funds in particular, India Earnings Fund (EPI, B-) and S&P India Nifty Fifty Index Fund (INDY, C+), have seen a rush of investors eager to buy into India [see also How To Pick The Right ETF Every Time].
Meet the Competitors
These ETFs are the two largest options available to invest exclusively in this BRIC market, holding roughly $470 million (INDY) and $1 billion (EPI) in total assets under management. EPI is managed by WisdomTree and follows a fundamentally weighted index of profitable Indian corporations with a heavy tilt to giant financial and energy groups. iShares INDY has an equally strong hold on giant financial services corporations, but is also heavily invested in technology and consumer defensive companies. Even with a thriving middle class and a growing economy, India has not been immune to the global economic slowdown. Like many BRIC countries, India has recently been hard pressed to turn out the same growth level seen only a few years ago [also see How Volatile Is Your Long/Short ETF].
Since INDY’s inception at the end of 2009, the cracks in India’s infrastructure have become more obvious and problematic for investors, causing many to pull away and look for a less risky option. As EPI is twice the size of INDY, it is no surprise that when these dramatic shifts in investing trends occur, EPI feels the hit harder than INDY [try our Free ETF Head-To-Head Comparison Tool].
The Bottom Line
As with all emerging market countries, volatility and uncertainty are to be expected – a trade-off investors are willing to take for relatively higher returns. When India and other BRIC economies were first “discovered” as a return-heavy market, developed nations were considered just as risky a bet with fewer opportunities for slow growth returns. Now that developed markets are turning back around and recovering, interest in India has sputtered out. Although both funds provide exposure to the Indian economy, there are some key differences in strategies that investors should be aware of before choosing a fund.
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Disclosure: No positions at time of writing.