ETFs and their focus
In the market, there are 11 exchange-traded funds (or ETFs) that focus on India. The Direxion Daily India Bull 3X Shares is leveraged. The iPath MSCI India Index ETN is closed for fresh investments.
Out of the remaining nine ETFs, the five that have the largest assets and the highest volumes are the WisdomTree India Earnings Fund (EPI), the iShares MSCI India ETF (INDA), the iShares S&P India Nifty 50 Index Fund (INDY), the PowerShares India Portfolio (PIN), and the VanEck Vectors India Small-Cap Index ETF (SCIF).
Out of these, SCIF focuses on small-cap stocks. It’s only suited for investors who are comfortable with high-volatility stocks. SCIF only has ~25% of its assets invested in the top ten holdings. For the other four ETFs, this value is 45%–56%.
EPI has the highest number of holdings at 232. SCIF holds 100 stocks. The other ETFs have 50–70 stocks in their portfolios.
INDY has the highest exposure to large-cap stocks among the five ETFs. Its exposure is 83.7%. It’s followed by PIN and INDA with 73.6% and 72.3%, respectively.
INDY is the only ETF that doesn’t have any exposure to small-cap stocks. INDY is the most expensive of the five ETFs. It has an expense ratio of 0.94%. INDA is the cheapest at 0.67%. The other ETFs’ expense ratios are 0.82%–0.89%.
A look at the sectoral exposure shows that except for PIN and INDA, the other three ETFs have over 25% exposure to financials. PIN and INDA have a higher exposure to technology than the other ETFs. PIN and INDA have over 20% technology exposure each. Not including financials and technology, EPI has a sizable exposure to energy. For PIN, energy is the largest component it holds.
Both INDY and INDA favor consumer non-cyclical stocks over energy stocks. It’s important to note that these holdings are based on the indices that these ETFs track. None of them are actively managed.
To learn more about India, visit Market Realist’s Emerging Market page.