India ETFs: Don’t Write Them Off
by Tom Lydon / ETF Trends
January 11, 2011
about: CEW / EPI / ICN / PIN
India’s ETFs got hit hard by yesterday’s rioting in Bangladesh, but there’s little reason to believe that India’s growth will be permanently damaged by what happened to its neighbor.
That said, India could be looking at a more tempered form of growth in 2011.
Economists believe that India’s economy could slow to 8% because of high inflation, fiscal deficit and current account deficits, according to Money Control. Nevertheless, Finance Minister Pranab Mukherjee maintains that the economy will improve to 9% in 2011.
One bugaboo remains inflation. The Reserve Bank of India has tried to constrain inflation through raising rates, but it still stands at 8%. A stronger rupee could be problematic for exports; Wells Fargo & Co. (WFC) projects that the rupee will appreciate up to 10% against the U.S. dollar as India’s Central Bank ticks off more interest rate hikes, as stated by Minyanville.
All that aside, India is still on track to become one of the world’s major players in the coming years. The consultancy group PriceWaterhouseCoopers stated that the Indian economy will experience the second-fastest growth between now and 2050. India will also become the second-largest economy in the world by 2050, reports Ashis Ray for The Times of India.
There are a host of ETFs available to give you exposure to India, including these:
•PowerShares India (PIN) and WisdomTree India Earnings (EPI) are both primarily large-cap funds that hold companies in India.
•WisdomTree Dreyfus Indian Rupee ETF (ICN). The fund holds a combination of U.S. money market securities with forward currency contracts and currency swaps that mimic a money market security denominated in Indian rupees.
•WisdomTree Dreyfus Emerging Currency ETF (CEW). The fund holds a basket of currencies from emerging markets that could raise rates due to their rapidly increasing inflation rates. India is 8.25%.
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