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SUMMARY
- Election of Narendra Modi has India on the path to reform.
- Recent focus on foreign policy disappointed some who want to see big reforms, but the trips were as much about economics as diplomacy.
- Recent dip in India ETFs offers buying opportunity.
- Small caps offer the best way to capture domestic growth.
In a summer rife with geo-political tensions – Russia and Ukraine, Israel and Hamas, Iraq Kurds and the Islamic State of Iraq and Al Sham – as well as an unsettling geo-biological event with the Ebola outbreak in several West African nations, investors seeking positive news are turning to a quietly improving story: India ETFs.
Securities that track a basket of equity and commodity indices, ETFs represent an entry strategy to a market poised to take advantage of the momentum that Prime Minister Narendra Modi and the victory of his Bharatiya Janata party have brought to India since the May election. Investment in India’s markets through ETFs allow for diversification, avoiding higher risk plays on specific industries, sectors and geographic regions. And unlike actively managed mutual funds, ETFs provide the option for short selling and buying on margin with generally lower expense ratios.
There are several options for India ETFs, among them WisdomTree India Earnings (NYSEARCA:EPI), iShares India 50 (NASDAQ:INDY), iShares MSCI India (BATS:INDA) and Market Vectors India Small Cap (NYSEARCA:SCIF).