India's economy has roared back to life after contracting sharply in the first year of the Covid-19 pandemic. The International Monetary Fund predicts that India's GDP will climb by 5.9% in 2023.
India's growth prospects are underpinned by a booming population and international investment. In April, the United Nations projected that India was on track to surpass China this year as the world's most populous country, with more than 1.4 billion inhabitants. And several major technology companies, including Apple, have announced plans in the last year to expand manufacturing operations there.
Key Takeaways
- Indian equities have underperformed the S&P 500 in the past year.
- The International Monetary Fund projects India's GDP to grow by 5.9% in 2023.
- Franklin FTSE India ETF has the lowest expense ratio. Columbia India Consumer ETF has the best 1-year performance. The iShares MSCI India ETF offers traders the best liquidity.
India exchange-traded funds (ETFs) offer a way for investors to geographically diversify their global portfolios by owning a range of companies trading on the National Stock Exchange of India Ltd. (NSE) and Bombay Stock Exchange (BSE).
India-based equities, as measured by the MSCI India Index, have underperformed U.S. equities over the past 12 months, with a total return of 15% compared with the S&P 500’s total return of 21%.
There are nine India ETFs that trade in the U.S., excluding inverse and leveraged ETFs, as well as funds with less than $50 million inassets under management (AUM). Note that these funds target Indian stocks rather than bonds.
Below, we look at three India ETFs with the lowest fees, the best 12-month return, and the most liquidity. All data below are as of June 22.
India ETF with the Lowest Fees: Franklin FTSE India ETF (FLIN)
- Performance Over One Year: 13.13%
- Expense Ratio: 0.19%
- Annual Dividend Yield: 0.7%
- 30-Day Average Daily Volume: 170,341
- Assets Under Management: $204.46 million
- Inception Date: Feb. 6, 2018
- Issuer: Franklin Templeton
FLIN tracks the FTSE India RIC Capped Index, a benchmark measuring the performance of Indian large- and mid-capitalization stocks. Financials make up the largest portion of the portfolio, at nearly 21%, followed by technology and energy companies.
The top holdings of FLIN include Reliance Industries Ltd. (RIGD), a manufacturer of petrochemicals, synthetic fibers, textiles, and more; Housing Development Finance Corporation Ltd. (HDB), a provider of housing finance to individuals and corporate customers in India; and Infosys Ltd. (INFY), a provider of IT consulting and software services.
India ETF with the Best 1-Year Return: Columbia India Consumer ETF (INCO)
- Performance Over One Year: 19.12%
- Expense Ratio: 0.75%
- Annual Dividend Yield: 0.21%
- 30-Day Average Daily Volume: 12,757
- Assets Under Management: $90.49 million
- Inception Date: Aug. 10, 2011
- Issuer: Columbia Management Investment Advisers, LLC
INCO targets the Indxx India Consumer Index, which is a free-float adjusted market capitalization-weighted index of no more than 30 companies in the consumer industry in India. Companies included in the index focus on autos, food products, beverages, media, household products, and other consumer segments. Consumer discretionary stocks make up 54.6% of holdings with consumer staples making up the remainder.
The top holdings of INCO include Tata Motors Ltd., an automotive manufacturing company; Titan Company Ltd. (TITAN.NS), a manufacturer of watches, jewelry, and eyewear; and Nestle India Ltd. (NESTLEIND.BO), a food products manufacturing company.
Most Liquid India ETF: iShares MSCI India ETF (INDA)
- Performance Over One-Year: 10.8%
- Expense Ratio: 0.64%
- Annual Dividend Yield: 0.38%
- 30-Day Average Daily Volume: 2,042,496
- Assets Under Management: $4.94 billion
- Inception Date: Feb. 2, 2012
- Issuer: Blackrock
INDA tracks the MSCI India Index, a benchmark that primarily consists of large- and mid-cap companies trading on the NSE and BSE.
INDA's top three holdings include Reliance Industries Ltd.; ICICI Bank Ltd. (IBN), a multinational financial services company; and Housing Development Finance Corporation Ltd.
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As of the date this article was written, the author does not own any of the above ETFs.
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