India ETFs Hit Sweet Spot, But For How Long? (PIN, EPI, INXX, INCO)

Christian Magoon: India ETFs charged forward last week with gains of between 4% – 9% for unleveraged products. Three of the top five performing India ETFs for the week were small cap focused. However, none of these funds took the number one spot with a 9.18% gain for the week. That honor belonged to the EG Shares India Consumer ETF (NYSEARCA:INCO).  Only the EG Shares India Infrastructure ETF (NYSEARCA:INXX) was able to join INCO as the other non small cap ETF in the top five. Here’s the performance grid snapshot of all U.S. listed India ETFs from IndiaETFs.com.

india etf, india etf fund list, India ETFs had a solid week of gains.
Source: IndiaETFs.com

The largest India ETF, which is sponsored by WisdomTree, is the India Earnings Fund (NYSEARCA:EPI). EPI continued its dominance over the second largest India ETF, the PowerShares India Portfolio (NYSEARCA:PIN). PIN has been a performance laggard in 2012 and has seen the distance dramatically widen between it and EPI. Here’s the year to date performance chart of all India ETFs. Note all unleveraged India ETFs are positive for the year.

india etf list, india fund listMost India ETFs are positive for the year. Source: IndiaETFs.com

India seems to be gaining momentum recently due to a perception that it may have been oversold by investors. Recent moves by companies like IKEA and Coca Cola to invest billions in India have encouraged investors that India will get past its political gridlock and economic slowdown. In addition more stability in the EU crisis, a simmering of global tensions with Iran and lower oil prices are showing favor on Indian markets. Still a great amount of work needs to be done to conquer rising inflation, high interest rates and dangerous deficits if India is to fully realize its potential over the longer term.

The most successful India ETFs in 2012 continue to be small caps over large caps, which suggests that the rally in India is still not over. Traditionally small caps would outperform near the late part of a rally yet since the beginning of the year funds like SCIF from Market Vectors and SCIN from EG Shares have dominated the performance charts. Indeed iShares decided to join this promising area of the Indian market when they launched SMIN earlier this year.

While this has been a much need bright spot for investors in India ETFs, one wonders how long it can continue without meaningful policy and economic reforms in India.

Written By Christian Magoon From Magoon Capital

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. Follow him on Twitter @ChristianMagoon. 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.”

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