With President-elect Trump set to take the oath of office in less than two weeks, and with 2025 in its early innings, advisors and investors are likely evaluating asset classes and ideas that could work well this year.
Not surprisingly, following a now lengthy stretch of disappointment, broad-based emerging markets strategies aren’t atop those lists. However, that doesn’t imply all developing economies are a lost cause for investors. Indeed, some market participants may be leery of investing outside the U.S. due to Trump’s tariff talk. That could prove to be more talk than action, though, indicating investors shouldn’t take their eyes off emerging markets this year.
India could be among the developing economies that shine bright this year, potentially signaling opportunity with exchange traded funds such as the WisdomTree India Earnings Fund (EPI ) and the WisdomTree India Hedged Equity Fund (INDH ).
India ETFs Potentially Poised for Strong 2025
Past performance isn’t a guarantee of future returns. That said, it’s worth noting that during Trump’s first term in office, India stocks performed well. In three of those four years, EPI posted gains and consistently beat emerging markets indexes. INDH debuted last year, so time will tell how that ETF reacts to Trump being in the White House. However, stablemate EPI proves that’s not necessarily a concern for Indian stocks.
In a recent interview with CNBC, GIB Asset Management’s Kunal Desai said India stocks could prove sturdy against the backdrop of a second Trump term, particularly if the U.S. and China escalate trade tensions. Under Prime Minister Narendra Modi, Indian economic policy has focused more on domestic consumption and infrastructure spending. This resulted in India’s reduced vulnerabilities to export gyrations and geopolitical controversies.
Infrastructure expenditures, a theme to which EPI and INDH have ties, have consistently grown in India over the past decade. Goldman Sachs said that trend — poised to accelerate this year — could benefit ETFs such as EPI and INDH.
Investors view India stocks as pricey relative to the broader emerging markets complex. However, valuation may not weigh on EPI and INDH this year. That’s because India’s fundamentals are worth paying up for.
“As well as geopolitics, Desai cited the country’s monetary sovereignty, improving return on equity — a key measure of a company’s profitability — and increased private investment as reasons to invest,” reported CNBC.
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