U.S. investors who enjoy diversifying abroad have faced some complicated narratives this year. Geopolitics broadly have posed challenges, but specifically, China itself has disappointed somewhat for those looking for a upside-heavy growth story. Those investors may want to turn instead to India investing ahead of 2024, with the nation’s growth story outpacing China’s last year.
Why India? The nation has outpaced many other major economies coming out of the COVID-19 crisis. A third term for controversial Prime Minister Narendra Modi looms, suggesting continued stability and pro-business reforms.
At the same time, broader, macroeconomic factors in the massive nation’s economy could benefit from decreased bureaucracy, more market freedom, and reduced corruption. The subcontinental behemoth has a large, growing middle class, an expanding skilled workforce, and growing ties with the U.S. and its economy.
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For those looking to dip their toes into India investing, the veteran WisdomTree India Earnings Fund (EPI ) can appeal. The fund was the first U.S.-listed ETF to buy local shares in India. On top of that background, the strategy’s weighting approach sets it apart. While other India investing strategies use market-cap-weighted approaches that risk exposure to unprofitable firms, EPI weights based on earnings.
India Investing in an Earnings-Weighted Approach
Charging an 84 basis point fee, EPI tracks the WisdomTree India Earnings Index. That leads it to hold names like Coal India Ltd (COALINDIA) at a higher weight than found in a rival ETF like the iShares MSCI India ETF (INDA ). The firm saw double-digit YoY percentage growth in net income, diluted EPS, and operating income in its September 2023 quarterly financials.
EPI has returned 17.8% YTD, far outpacing its ETF Database Category and FactSet Segment Averages, which returned 5% and 6.9%, respectively. Over five years, EPI also outperformed, returning 11.5% to 2.4% and 4.9% respectively. For investors excited about the India investing story, EPI may be one to watch.
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