Investing In India: 5 Of The Best India ETF Products In 2012 (SCIF, SCIN, INCO, INXX, EPI, INDY, PIN)
Christian Magoon: The best India ETF products in 2012 have produced positive gains as all but one has delivered double digit performance year to date. These leaders include:
- The Market Vectors India Small Cap ETF (NYSEARCA:SCIF)
- The EG Shares India Small Cap ETF (NYSEARCA:SCIN)
- The EG Shares India Consumer ETF (NYSEARCA:INCO)
- The EG Shares India Infrastructure ETF (NYSEARCA:INXX)
- The WisdomTree India Earnings ETF (NYSEARCA:EPI)
A few quick observations on this list. First EG Shares is dominating the performance race in this space. Their approach to small caps and sectors has produced results that are impressive. Second, as we have been writing all along, India small cap ETFs continue to lead the entire India ETF group. SCIF has distanced itself from all other ETFs, with a 400bps lead over the next closest fund. Finally, the PowerShares India ETF (NYSEARCA:PIN) did not make the cut. This is significant as it is the second largest India ETF. For more details on the leaders, here are the five best India ETF products of 2012 via the IndiaETFs.com performance grid.
FIVE BEST INDIA ETF PRODUCTS IN 2012
Although the chart illustrates attractive gains in 2012, the reality is that the Indian markets are now in a strong slide downward. Investor concerns bringing markets down include the fiscal and current account deficit in India, high inflation, new taxation and the lack of faith in the Indian government to implement much needed reforms. All these concerns, and many others, have effectively reversed the beginning of the year momentum.
To illustrate this, take a look at the year to date chart of (NYSEARCA:INDY), the ETF that tracks the S&P Nifty Fifty Index. Along with INDY’s price movement, the chart also shows the 50 day moving average for INDY and notes key inflection points in the market this year. This chart was composed on stockcharts.com.
While there are immense challenges to Indian markets, a few bright spots have emerged. Oil prices are falling quickly which helps India, an importer of around 85% of their oil. Higher oil prices were becoming a serious threat over the last few months to economic growth. In addition, weakening economic data from the U.S. and EU raises the chance of more liquidity being introduced worldwide. Already China and India have made moves to bolster liquidity and if that occurs globally, a “risk on” move will take place in the markets. This would benefit India as foreign inflows have a significant impact on this marketplace.
The best India ETF products take unique approaches to the Indian markets. All have gains this year but now they are on a prolonged downward trend. While this is likely to continue for the foreseeable future, the markets will eventually become oversold as they did in 2011. At that point there will be significant bargains to be had inside a country with a strong tradition of economic growth.
Christian Magoon is Publisher of GoldETFs.biz and IndiaETFs.com. He is also CEO of Magoon Capital, a strategic consultant firm to asset managers. Christian Magoon is an ETF insider, having launched over 40 ETFs in the United States to date. A widely recognized thought leader on finance and market issues, Christian regularly contributes to many financial media outlets. Prior to forming Magoon Capital in 2010, Christian was President of Claymore Securities (now Guggenheim Investments), where he built one of the fastest growing and most innovative ETF businesses in the country, gathering more than $3 billion in AUM in three years. He launched more than 40 ETFs, introducing many “firsts” to the U.S. market, including the first Frontier Markets, Sector Rotation, Solar Energy, Timber, BRIC and suite of China focused ETFs. Christian consistently provides his industry insights and knowledge as a commentator in the U.S. media speaking publicly on macro investment issues and ETF related topics. In 2008, he was named by Institutional Investor News as one of the five people to watch in the U.S. ETF marketplace. In 2011, Financial Planning magazine dubbed Christian an “ETF Pioneer.”