India Reports Mixed PMI: ETFs In Focus

India’s manufacturing activity hit a four-month low in June 2017 owing to fewer new orders. The Nikkei India Manufacturing Purchasing Managers’ Index came up with a reading of 50.9 in June compared with 51.6 in May. A reading above 50 indicates expansion.

The new orders sub-index declined to 51.3 in June compared with 52.6 in May. This index is representative of both domestic and foreign demand.

However, India’s services sector expanded to an eight-month high. The Nikkei/IHS Markit Services Purchasing Managers’ Index rose to 53.1 in June compared with 52.2 in May. This sector is particularly important for India’s performance in the global map as it accounts for more than 60% of the country’s GDP.

India’s consumer prices increased 2.18% year over year in May 2017 compared with 2.99% in April and below market estimates of 2.6%. India’s GDP grew 6.1% in the first quarter of 2017 compared with 7% in the previous period and below market estimates of 7.1%. This presents a strong case for possible rate cuts (read: India Inflation at Record Low: ETFs in Focus).

India introduced a major tax reform earlier this month with the introduction of a single unified tax, Goods and Services Tax (GST). With the demonetization effect almost over, the market is bullish on the role GST will play in driving economic growth (read: India to Unify Tax: Near-Term Pain/Long-Term Gain for ETFs).

Let us now discuss a few ETFs focused on providing exposure to the emerging market nation (see all Asia-Pacific (Emerging) ETFs here).

iShares MSCI India ETF INDA

This fund provides exposure to large and mid-sized Indian equities.

It has AUM of $5.05 billion and charges a fee of 71 basis points a year. Financials, Computer-Software and Consumer Discretionary are the top three sectors of the fund, with 23.06%, 13.57% and 12.60% allocation, respectively (as of July 3, 2017). Housing Development Finance Co, Reliance Industries Ltd and Infosys Ltd are the top three holdings of the fund, with 9.06%, 6.64% and 6.49% allocation, respectively (as of July 3, 2017). The fund has returned 16.89% in the last one year and 21.35% year to date (as of July 3, 2017). INDA currently has a Zacks ETF Rank 2 (Buy) with a Medium risk outlook (read: Why India ETFs are Soaring in 2017).

WisdomTree India Earnings Fund (TO:EPI)

This fund provides exposure to Indian equities in multiple capitalization segments.

It has AUM of $1.66 billion and charges a fee of 84 basis points a year. Financials, Energy and Information Technology are the top three sectors of the fund, with 25.53%, 19.99% and 16.33% allocation, respectively (as of July 3, 2017). Reliance Industries Ltd, Infosys Ltd and Housing Development Finance Co are the top three holdings of the fund, with 10.9%, 6.65% and 6.39% allocation, respectively (as of July 3, 2017). The fund has returned 22.89% in the last one year and the same return year to date (as of July 3, 2017). EPI currently has a Zacks ETF Rank 2 with a Medium risk outlook (read: India ETFs: More Run Ahead?).

iShares India 50 ETF (JK:INDY)

This fund provides exposure to large-cap Indian equities.

It has AUM of $1.01 billion and charges a fee of 94 basis points a year. Banks, Computer-Software and Refineries/Marketing are the top three sectors of the fund, with 26.29%, 10.94% and 8.35% allocation, respectively (as of July 3, 2017). ITC Ltd, Housing Development Finance Co and Reliance Industries Ltd are the top three holdings of the fund, with 8.05%, 7.15% and 6.36% allocation, respectively (as of July 3, 2017). The fund has returned 20.42% in the last one year and 24.25% year to date (as of July 3, 2017). INDY currently has a Zacks ETF Rank 2 with a Medium risk outlook.

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