February 7, 2012
iShares continued to debut new products at an impressive pace on Friday with the introduction of another India ETF. The new MSCI India ETF (INDA) will list on the BATS, joining several other iShares funds on the third-largest U.S. exchange. Last month iShares became the first ETF issuer to list on the BATS, spurning the NYSE and NASDAQ for a newcomer that has been aggressively competing for new listings with dramatically lower fees [see also The Ten Commandments of Commodity Investing].
The new ETF is linked to an index that consists of about 72 Indian stocks, many of which are large caps. INDA makes its largest allocations to the financials (25%), technology (19%), and energy (12%) sectors. Underweight from a sector perspective are telecom (3%), utilities (5%) and health care (5%). The biggest individual weights are afforded to Infosys (11%) and Reliance Industries (9%)
Exchange-traded products offering exposure to India have come out blazing in 2012 after a disappointing end to last year. Many India ETFs posted gains of 20% or more in January thanks to increased appetite for risk and belief among investors that India was taking effective steps to curtail the inflationary pressures that had weighed on stock prices in 2011. ETFs focusing on small cap Indian stocks, including SCIN and SCIF, are up close to 40% already in 2012.
With the introduction of INDA there are now nine non-leveraged India ETPs on the market, with aggregate assets of more than $2 billion. Direxion also offers a pair of 3x and -3x daily leveraged ETFs (INDL, INDZ) linked to the Indus India Index.
INDA is the second exchange-traded product to replicate the MSCI India Index, joining the iPath MSCI India Index ETN (INP). The iPath ETN is linked to a total return version of the MSCI India Index, meaning that it does not make dividends but rather assumes that all payouts are reinvested in the underlying securities. Despite some anxiety over the credit risk component of exchange-traded notes, INP has become an extremely popular way to gain access to Indian equities; the product, which debuted in late 2006, has assets of more than $550 million [see also ETFs For The Capital Preservationist].
INDA is the second India ETF in the iShares lineup; in 2009 the firm debuted the S&P India Nifty Fifty Index Fund (INDY), which focuses on 50 of the largest names in the Indian market. INDY and the recently-launched INDA have significant overlap; the top ten holdings are generally similar, and the sector breakdown is similar as well.
Continuing a recent trend in iShares launches, INDA will stack up quite favorably in terms of expenses with the existing lineup of India ETFs. INDA charges an expense ratio of just 0.65%, which beats the other India ETFs by a wide margin. The WisdomTree India Earnings Fund (EPI), the most popular India ETF with assets of , charges 0.83%. The PowerShares India Portfolio (PIN) is the next cheapest at 0.78%.
Source: Yahoo Finance