Particularly among markets outside the U.S., India has long been of the most technologically advanced countries and home to one of the more robust tech sectors.
However, that story is still evolving, bringing with it an array of investment implications. Those opportunities accentuate the need for investors to be selective with how they access India equities via ETFs. That’s because not all of the funds in this category are up to the task of delivering adequate tech/digital exposure.
But the VanEck Digital India ETF (DGIN ) is. The fund turned two years old earlier this month, and follows the MVIS Digital India Index. That benchmark is dedicated to “companies involved in supporting the digitization of the Indian economy,” according to VanEck. Translation: DGIN is arguably one of the more attractive ETFs for investors seeking exposure to some of the more compelling stories in India’s economy.
Why Digital India ETF DGIN Matters Now
India’s traditional informational technology is large and well-established. Related spending could flirt with $125 billion this year. But there’s more to the story, including growth in India’s internet sector. That could provide long-term support for the DGIN thesis.
“India’s internet economy, valued at around USD 175 billion in 2022, is projected to experience significant growth, reaching USD 1 trillion by 2030,” according to S&P Dow Jones Indices. “This shift is guided by the “Digital India” campaign, aiming to upgrade online infrastructure, expand connectivity and digitize public services for its citizens.”
From a consumer internet perspective, India is one of the most alluring destinations in the world for multiple reasons. Those include the points that the country is now larger by population than China, with better demographics than China. DGIN allocates more than 24% of its roster to communication services and consumer internet stocks. Some of those stocks are rising players on the country’s e-commerce/online retail stage.
India’s digitization is rapidly moving beyond IT services and software, akthough those industries remain important. Not all India ETFs are equipped to handle that transition, but DGIN allays those concerns.
“India’s tech narrative goes well beyond its traditional IT expertise. To accurately measure the evolving Indian technology landscape through indices, a nuanced approach is necessary—one that acknowledges the broader, more inclusive definition of what constitutes a technology company today and looks ahead longer term,” concluded S&P Dow Jones.
DGIN has 38 holdings, with a weighted average market capitalization of $52.6 billion.
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