For many advisors and investors, accessing emerging markets via broad-based funds, including ETFs, is the preferred operating method. That strategy limits exposure to region-specific issues and political volatility, among other traits. However, there are instances in which making single-country bets is rewarding. Take the case of the WisdomTree India Earnings Fund (EPI ) over the past several years, and more recently, the WisdomTree India Hedged Equity Fund (INDH).
Broader gauges of emerging markets and China stocks are mired in multiyear runs of disappointment relative to U.S. equities. But EPI is higher by 31.3% over the past three years.
That nearly matches the S&P 500. It’s also better than 3x the returns offered by the MSCI Emerging Markets Index over the same period. Some market observers believe the recent retrenchment in India equities could represent a buying opportunity.
“In our view, the recent public equity market correction may offer an attractive entry point into one of the world’s fastest growing major economies, where corporates remain well-positioned to deliver on long-term earnings growth,” observed Goldman Sachs Asset Management (GSAM).
Keeping India Separated With EPI, INDH
Single-country investing isn’t for everyone. But as EPI’s aforementioned performance confirms, India stocks have rewarded investors willing to make stand-alone bets on the country. It’s possible that scenario will continue, further boosting the allure of ETFs like EPI and INDH.
“We believe India’s equity market presents a compelling case for standalone asset [allocation. That’s due to] its high growth and strong earnings potential, and subsequently, higher equity returns,” noted GSAM. “India also has a large and diverse equity universe, and low correlations to other [markets. That heightens] the appeal of a dedicated India equity allocation.”
Those looking for upside amid recent weakness in India stocks can take heart in knowing the pullback has damped valuations slightly. That’s potentially good news for a market that was viewed as one of the most expensive in the world.
Furthering the case for EPI and INDH is that India’s fast-growing economy is structurally sound. That arguably makes for a compelling reason to consider the funds than valuation alone.
'Fundamentally Strong'
“We view India’s economy and corporate sector as fundamentally strong and—with absolute valuations having [cooled. We also] believe the current environment presents an attractive entry point into one of the fastest growing major economies of the world. Consensus earnings estimates remain robust, with 2025 and 2026 earnings at 14% and 15%, [respectively. In our view, that] should continue to support Indian markets,” concluded GSAM.
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