Investing in India is becoming popular world wide. Thanks to lots of Exchange Traded Funds, which channelized close to six billion dollars (That’s 25% of total FII inflow ) last year into India.
In addition to diversified emerging markets funds and BRIC ETFs, which generally make a significant allocation to Indian equities, the number of ETFs that invest exclusively in India’s stock market is on the rise. So much so that at a recent ETF conference in the US, there was talk that of the 200-odd new ETFs expected to be launched in 2010, quite a few will have an emerging market and India focus in particular.
Investors prefer ETFs for their flexibility. Globally, it is growing at more than 40% every year. With more and more people looking at developing economies, ETFs are gaining in popularity. For the man on the street, this is a cheaper and more flexible route to take exposure to economies like India.
Currently, exclusive India-focused ETFs are WisdomTree India Earnings Fund (EPI), PowerShares India Portfolio (PIN) and the recently launched iShares S&P India Index Fund (INDY). iPath MSCI India ETN (INP) is another exchange-traded note (ETN) which was first introduced in 2006. INP was the first exchange-traded product to offer exposure to Indian markets and now has a total market capitalisation of more than $1.2 billion.
Emerging Global Advisors will launch an India Infrastructure Fund and an India Mid Cap Fund. The infrastructure ETF will be based on an index composed of 50 Indian infrastructure stocks, while companies eligible for inclusion in the mid-cap ETF will have a market capitalisation less than the smallest company in the S&P CNX Nifty Index.
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