These Two India ETFs Are Leading Emerging Markets Higher

indiaOver the past month, investors have witnessed a reversal in the emerging market ETF world. Funds in this space, such as the ultra-popular (NYSEARCA:VWO) and (NYSEARCA:EEM), have been lagging the U.S. market for much of 2013, but have finally turned it around the past few weeks.

EGShares India Consumer ETF (NYSEARCA:INCO)

With a lowered inflation rate and commodities flat, it has been a good time to be a consumer-oriented firm in India. Plus, the nation has a huge middle class that could continue to grow if growth rates stay above the 5% mark.

One targeted way to play this is via INCO, an ETF that holds about 30 Indian consumer stocks in its portfolio. The fund is a tad expensive though, as expenses come in at 89 basis points a year while bid ask spreads are relatively wide as well.

Large caps account for about 60% of the fund’s assets, while mid caps make up the rest of the fund. The product is also well split between cyclical and staples, although it does tilt towards auto manufacturers, food products, and auto parts in terms of industries.

EG Shares Index India Infrastructure Index Fund (NYSEARCA:INXX)

India is notorious for its weak infrastructure, and the government has begun to rectify this problem on a massive scale. And with sluggish commodity prices it has been even easier for governments to ramp up development in this field, making an ETF like INXX a solid pick.

The fund targets the Indxx India Infrastructure index, giving investors exposure to about 30 stocks that have big infrastructure operations in India. Once again, this fund is a bit expensive at 85 basis points a year, though its volume is slightly better (it still has a relatively wide bid ask spread though).

In terms of sectors, the fund has a nice split with 25% to utilities, 22% to industrials, and about 21% in basic materials. The product is heavy in large caps though, while it also has a big chunk of its assets in value stocks (see Time to Buy the India Infrastructure ETF).

Bottom Line

Emerging markets have been coming back in a big way over the past month, with many broad indexes beating out domestic counterparts. This is a sharp departure from what investors were seeing in the early part of the year, as many emerging market ETFs were lagging far behind U.S. stocks to start 2013.

Most impressive of all in this turnaround though was the India ETF space. Funds in this segment set the pace for the market, at least over the past month. While the gains have been broad based, a few specialized sectors—represented by INXX and INCO—have been the true stars in the country and could be worth a closer look by risk-tolerant emerging market ETF investors at this time.

EGShares India Consumer ETF (NYSEARCA:INCO)

With a lowered inflation rate and commodities flat, it has been a good time to be a consumer-oriented firm in India. Plus, the nation has a huge middle class that could continue to grow if growth rates stay above the 5% mark.

One targeted way to play this is via INCO, an ETF that holds about 30 Indian consumer stocks in its portfolio. The fund is a tad expensive though, as expenses come in at 89 basis points a year while bid ask spreads are relatively wide as well.

Large caps account for about 60% of the fund’s assets, while mid caps make up the rest of the fund. The product is also well split between cyclical and staples, although it does tilt towards auto manufacturers, food products, and auto parts in terms of industries.

EG Shares Index India Infrastructure Index Fund (NYSEARCA:INXX)

India is notorious for its weak infrastructure, and the government has begun to rectify this problem on a massive scale. And with sluggish commodity prices it has been even easier for governments to ramp up development in this field, making an ETF like INXX a solid pick.

The fund targets the Indxx India Infrastructure index, giving investors exposure to about 30 stocks that have big infrastructure operations in India. Once again, this fund is a bit expensive at 85 basis points a year, though its volume is slightly better (it still has a relatively wide bid ask spread though).

In terms of sectors, the fund has a nice split with 25% to utilities, 22% to industrials, and about 21% in basic materials. The product is heavy in large caps though, while it also has a big chunk of its assets in value stocks (see Time to Buy the India Infrastructure ETF).

Bottom Line

Emerging markets have been coming back in a big way over the past month, with many broad indexes beating out domestic counterparts. This is a sharp departure from what investors were seeing in the early part of the year, as many emerging market ETFs were lagging far behind U.S. stocks to start 2013.

Most impressive of all in this turnaround though was the India ETF space. Funds in this segment set the pace for the market, at least over the past month. While the gains have been broad based, a few specialized sectors—represented by INXX and INCO—have been the true stars in the country and could be worth a closer look by risk-tolerant emerging market ETF investors at this time.

This article is brought to you courtesy of Eric Dutram From Zacks.

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