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Invest In India's Economic Boom Via 2 ETFs Delivering Regional Equity Exposure

By Investing.com (Tezcan Gecgil/Investing.com )ETFsNov 11, 2021 05:09AM ET
www.investing.com/analysis/invest-in-indias-economic-boom-via-2-etfs-delivering-regional-equity-exposure-200607995
Invest In India's Economic Boom Via 2 ETFs Delivering Regional Equity Exposure
By Investing.com (Tezcan Gecgil/Investing.com )   |  Nov 11, 2021 05:09AM ET
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India has one of the fastest growing economies in the world. The country is a member of the Group of Twenty (G20) intergovernmental forum, and the International Monetary Fund (IMF) expects its economy to grow 9.5% in 2021.

For comparison, the projected growth rates for several other countries are: Australia (3.5%), Brazil (5.2%), China (8.0%), Germany (3.1%), Ireland (13.0%), Israel (7.1%), Japan, (2.4%), Peru (10.0%), South Africa (5.0%), Turkey (9.0%), the UK (6.8%), and the U.S. (6.0%). The IMF further suggests:

“The global economy is projected to grow 6.0% in 2021 and 4.9% in 2022.”

Meanwhile, veteran investor Mark Mobius has recently reiterated his long-held conviction that Indian stocks should see significant upside in the coming years. He compared the country with where China was about a decade ago.

Recent metrics show that India’s services sector (especially telecommunications, IT and software) comprises about half of the gross domestic product (GDP), followed by industry (24.18%) and agriculture (18.32%). Close to a fifth of India’s exports go to the U.S. Its other leading trading partners include China, United Arab Emirates, Hong Kong, Singapore, Bangladesh, the UK, Germany, the Netherlands and Malaysia.

With that information, here are two exchange-traded funds (ETFs) that could appeal to readers bullish on India. Both funds come from the iShares range of funds managed by BlackRock (NYSE:BLK).

1. iShares MSCI India ETF

  • Current Price: $50.00
  • 52-Week Range: $35.66 - $50.80
  • Dividend Yield: 0.15%
  • Expense Ratio: 0.69% per year

The iShares MSCI India ETF (NYSE:INDA) invests in 101 large- and mid-sized Indian businesses. The fund started trading in February 2012.

INDA Weekly Chart.
INDA Weekly Chart.

INDA tracks the returns of the MSCI India Index. Portfolio weightings of major sectors are as follows: financials (26.30%), IT (17.31%), energy (12.09%), materials (9.72%) and consumer staples (8.85%). The top 10 holdings comprise close to half of net assets, which stand at $6.48 billion.

The highest share (9.83%) belongs to the largest private sector holding group in India, Reliance Industries (NS:RELI), which has operations in retail, digital services, media, entertainment, oil and chemicals sectors. Next in line are the IT and consulting heavyweights Infosys (NYSE:INFY) and Tata Consultancy Services (NS:TCS); leading housing finance provider Housing Development Finance (NS:HDFC); financial services group ICICI Bank (NYSE:IBN); and consumer goods manufacturer and distributor Hindustan Unilver (NS:HLL).

INDA is up almost 25% this year and 38% in the past 12 months. The fund hit a record high in recent days. P/E and P/B ratios of 32.03x and 4.01x point to an overstretched valuation level. Therefore, buy-and-hold investors could regard a decline of 3%-5% as a better entry point.

2. iShares MSCI India Small-Cap ETF

  • Current Price: $62.19
  • 52-Week Range: $36.03 - $64.05
  • Dividend Yield: 0.08%
  • Expense Ratio: 0.81% per year

The iShares MSCI India Small-Cap ETF (NYSE:SMIN) invests in small-capitalization Indian equities. The fund started trading in February 2012.

SMIN Weekly Chart.
SMIN Weekly Chart.

SMIN, which has 261 stocks, tracks the returns of the MSCI India Small Cap Index. With an 18.30% share, materials is the leading sub-sector in the ETF. It is followed by industrials (17.56%), financials (15.11%), consumer discretionary (11.53%), IT (11.26%) and health care (8.30%). The leading 10 names account for about 17% of net assets of $427.4 million.

Among the top names on the roster are the energy group Tata Power (NS:TTPW); chemicals company SRF (NS:SRFL); IT services stock Mphasis (NS:MBFL); media conglomerate Zee Entertainment Enterprises (NS:ZEE), IT and outsourcing name MindTree (NS:MINT); and real estate developer Godrej Properties (NS:GODR).

The ETF is up more than 48% in 2021 and 72.5% in the past year. SMIN saw an all-time high in mid-October. P/E and P/B ratios are 31.34x and 3.86x, respectively. Interested readers could regard a potential decline toward $60 as a better entry point.

Invest In India's Economic Boom Via 2 ETFs Delivering Regional Equity Exposure
 

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Invest In India's Economic Boom Via 2 ETFs Delivering Regional Equity Exposure

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Comments (9)
Gous ali oman
Gous ali oman Nov 13, 2021 12:52AM ET
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kunju pm
kunju pm Nov 12, 2021 6:38AM ET
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indian stock market boom is manipulated by fils to cheat indian retail traders
Shyam Shah
Shyam Shah Nov 11, 2021 11:26AM ET
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I wouls also consider WAINX very decent performance of 60% in 1 year.
Khwarizmi Algebra
Khwarizmi Algebra Nov 11, 2021 11:23AM ET
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Your growth data is misleading. Some countries are recording high growth reaching even above 15% in 2021 compared to 2020 because their economy was weak and hit badly by the pandamic in 2020.
Dhanraj k  yadav
Dhanraj k yadav Nov 11, 2021 11:04AM ET
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Hello friends
Kamlesh Kamliya
Kamlesh Kamliya Nov 11, 2021 11:04AM ET
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hi. Friends
Dhanraj k  yadav
Dhanraj k yadav Nov 11, 2021 11:04AM ET
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Hello friends
Abu Abu
Abu Abu Nov 11, 2021 11:04AM ET
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hello
Mohd Izhar Muslim
Mohd Izhar Muslim Nov 11, 2021 8:30AM ET
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that sounds greatly, I'm really appreciate with your articles. thanks 👍
Atleast Maximum
Atleast Nov 11, 2021 6:46AM ET
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India will be safer investment than China and eu for sure in coming years given if business friendly BJP remains in power. other political groups are unreliable but Mr Modi's BJP group is the future for industry in India
Prashant Amrutkar
Prashant Amrutkar Nov 11, 2021 5:33AM ET
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ye mera India, i love my India 🇮🇳👍
 
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