India exchange-traded funds (ETFs) offer a way for investors to geographically diversify their global portfolios by owning a range of companies in the world’s second most-populous nation and one of the world’s largest emerging markets. India ETFs track the performance of a basket of equities trading on the National Stock Exchange of India (NSE). This allows investors to benefit from India’s economy, which has expanded faster than many developed nations in recent years. Some of India’s largest companies include India Oil Corp. (IOC), Bharat Petrol Corp. (BPCL), and Tata Motors Ltd. (TATAMOTORS). Both the returns and risks in emerging-market economies can be high. The risks may be especially heightened in 2020 due to the ongoing coronavirus pandemic and the negative impact it is having on the global economy.
The India ETF universe is comprised of about 7 distinct ETFs, excluding inverse, leveraged, and other ETFs with less than $50 million in assets under management (AUM). The best-performing India ETF for Q3 2020, based on performance over the past year, is the Columbia India Consumer ETF (INCO). We examine the 3 best India ETFs below. Note that while all three funds had negative one-year total returns, they were the funds that fell the least during a tumultuous year in the global securities markets. All numbers in this story are as of May 11, 2020.
- Performance over 1-Year: -16.6%
- Expense Ratio: 0.75%
- Annual Dividend Yield: 0.37%
- 3-Month Average Daily Volume: 16,722
- Assets Under Management: $65.4 million
- Inception Date: August 10, 2011
- Issuing Company: Columbia Threadneedle Investments
INCO is a large-cap ETF primarily focused on India’s consumer discretionary sector and tracks the Indxx India Consumer Index, and invests in both growth and value stocks. The ETF holds about 70 components with a heavy focus on 10 stocks, so the underlying portfolio is a bit concentrated. The ETF’s top three holdings include Nestle India Ltd. (NEST), a manufacturer of brand name milk products and other food products; Avenue Supermarts Ltd. (DMART), an owner and operator of a chain of hypermarkets and supermarkets; and Britannia Industries Ltd. (BRITANNIA), a manufacturer of various food products and general merchandise items.
- Performance over 1-Year: -16.9%
- Expense Ratio: 0.82%
- Annual Dividend Yield: 37.0%
- 3-Month Average Daily Volume: 51,189
- Assets Under Management: $74.2 million
- Inception Date: March 5, 2008
- Issuing Company: Invesco
PIN is a large-cap ETF that follows a blended strategy of investing in a mix of value and growth stocks. Like INCO, the PIN ETF also lacks diversity. It tracks the Indus India Index and owns only about 50 components, with several stocks held at double-digit shares of the portfolio. The ETF’s top three holdings include Reliance Industries Ltd. (RIL), a manufacturer of petrochemicals, synthetic fibers, textiles, and more; Infosys Ltd. (INFO), a consulting and software services company; and Housing Development Finance Corp. Ltd. (HDFC), a provider of housing finance.
- Performance over 1-Year: -19.4%
- Expense Ratio: 0.69%
- Annual Dividend Yield: 1.33%
- 3-Month Average Daily Volume: 7,810,977
- Assets Under Management: $2,746.3 million
- Inception Date: February 2, 2012
- Issuing Company: iShares
INDA is a large-cap ETF that follows a blended strategy, investing in a mix of value and growth stocks. The fund is comprised of about 70 different components and tracks the MSCI India Index. INDA has one of the cheapest expense ratios among India ETFs, and may attract cost- conscious, buy-and-hold investors. The ETF’s top three holdings include Reliance Industries, Housing Development Finance, and Infosys.