Best India ETFs for 2024
India might not be the country at the top of every investor’s list when it comes to prospective investment opportunities. Especially in the Western Hemisphere, the country and its stock markets are rarely discussed or just mentioned in passing, such as when the BRICS (Brazil, Russia, India, China, South Africa) acronym is discussed.
The total value of India’s equity market, however, now ranks it as the fourth largest in the world, behind the United States, China, and Japan. India’s economy has also been growing rapidly, and with a population of more than 1.4 billion people, it has a large pool of potential consumers and workers that both Indian and foreign companies can benefit from.
This article covers what exactly India ETFs are, the advantages and disadvantages of investing in them, and provides a list of some of the best India ETFs to keep an eye on.
Table of Contents
Key Takeaways
- India ETFs are exchange-traded funds that investors can purchase like shares to access the performance of a range of companies in the Indian stock market.
- India is a rapidly developing country whose economy grew by an average of 6.21% per year in the period from 2006 to 2023. India is the most populous country worldwide, with a population of 1.4 billion people, representing a large pool of potential consumers and workers.
- Investing in India ETFs means investing in an emerging market that has the potential to grow into one of the leading economic powers in the coming decades. Combined with ETFs that focus on other economies, this can be a tool for diversifying a portfolio.
- While India’s economy and many of the country's biggest companies post considerable year-on-year growth numbers, the Indian rupee has not been performing well against Western currencies like the dollar and the euro. This can eat away at potential profits for foreign investors.
What are India ETFs
An Exchange-Traded Fund (ETF) is a type of investment product that allows investors to buy a basket of stocks all at once. An ETF is listed on a stock exchange and can be bought or sold like regular stocks. The stocks that form the basket often follow a certain theme or selection criteria.
The unifying theme for the ETFs mentioned in this article is that they all follow a certain index of large Indian stocks that are eligible to be invested in by foreign investors. India has several laws and legal limitations placed on foreign investors, which places many companies within its economy out of reach for investment by foreign actors.
Best India ETFs to Watch
The following section covers a list of various India ETFs to keep an eye on. While these India ETFs have been carefully selected for their relevance, it is important to note that the notion of ‘best’ is subjective. Which investment products are appropriate for a given investor depends on their financial situation and personal goals. This list of India ETFs, therefore, should serve as a starting point for investors looking to perform their own research.
- iShares India 50 ETF – The Top 50 Biggest Indian Companies by Market Capitalization
- WisdomTree India Earnings Fund ETF – The Biggest Indian Companies by Earnings
- iShares MSCI India ETF – MSCI Index Tracker Representing Large and Mid-Capitalisation Indian Equity
iShares India 50 ETF – The Top 50 Biggest Indian Companies by Market Capitalisation
The iShares India 50 ETF tracks the 50 largest Indian companies by market capitalisation. The fund contains around $650 million in capital, around a third of which is allocated to the top ten holdings.
The fund’s top ten holdings are HDFC Bank, Reliance Industries, ICICI Bank, Infosys, ITC, Tata Consultancy Services, Larsen and Toubro, Kotak Mahindra Bank, Axis Bank, and Hindustan Unilever. The largest equity, HDFC Bank, accounts for 13.84% of the fund’s capital allocation, and Hindustan Unilever accounts for 2.63%.
More than a third of the fund’s capital is allocated within the financial sector, which is also evident from the many banks in its top ten holdings. The next two sectors by size are Information Technology (13.5%) and Energy (~12%). The rest of the fund’s capital is spread over a number of different sectors in smaller amounts. The fund trades under the ticker symbol ‘INDY’ on the NASDAQ stock exchange. With Admiral Markets, you can trade the iShares India 50 ETF CFD (contracts for difference). This is a derivative contract of the underlying market which enables you to trade long and short.
WisdomTree India Earnings Fund ETF – The Biggest Indian Companies by Earnings
The WisdomTree India Earnings Fund ETF is a fund that selects the biggest companies in India’s economy by their earnings. Some investors believe that focusing on earnings is a better indicator of the health of a company rather than the mere size of the company.
The top ten holdings of the fund are Reliance Industries, ICICI Bank, Oil and Natural Gas Corporation, Infosys, Tata Consultancy Services, Axis Bank, NTPC, Power Grid Corporation of India, and Indian Oil Corporation. Reliance Industries accounts for 6.4% of the fund’s capital allocation, and Indian Oil Corporation accounts for roughly 2%.
The sectors represented in this fund are mainly Basic Materials (~23%), Energy (~17%), Financial Services (~16%), and Technology (~11%). The fund trades under the ticker symbol ‘EPI’ on the New York Stock Exchange. With Admiral Markets, you can trade the WisdomTree India Earnings Fund ETF CFD.
iShares MSCI India ETF – MSCI Index Tracker Representing Large and Mid-Capitalisation Indian Equity
The iShares MSCI India ETF tracks the MSCI India Index, which seeks to represent the large and mid-capitalisation segments of the Indian securities market. The fund is passively managed, meaning it only rebalances according to changes in the index and does not take defensive positions during market downturns. This fund contains around $6 billion in capital, making it the largest India ETF currently on the market.
The top ten holdings in this fund by capital allocation are Reliance Industries, ICICI Bank, Infosys, HDFC Bank, Tata Consultancy Services, Axis Bank, Hindustan Unilever, Kotak Mahindra Bank, Bharti Airtel, and Bajaj Finance. The largest holding, Reliance Industries, accounts for roughly 9.5% of the fund’s capital. Bajaj Finance accounts for roughly 2.3%.
Roughly a quarter of the fund’s $6 billion in assets is allocated to the Financial sector. The few sectors by the size of their capital allocation are Information Technology (~13.5%), Energy (~12%), Discretionary Consumer Goods (~11%), and Consumer Staple Goods (~9.4%). The rest of the fund’s capital is spread in small amounts over an assortment of other sectors. The fund trades under the ticker symbol ‘INDA’ on the New York Stock Exchange.
How to Invest in India ETFs
With Admiral Markets, you can invest in global stocks and ETFs with the following commissions:
- UK stocks and ETFs – 0.1% of trade value, 1 GBP minimum commission
- US stocks and ETFs – From $0.02 per share, 1 USD minimum commission
- Germany and France stocks and ETFs - 0.1% of trade value, 1 EUR minimum commission
You can learn more about investing commissions on the Admiral Markets Contract Specification page. You can search for global stocks and ETFs from the Invest.MT5 web platform and invest in four steps:
- Open an account with Admiral Markets.
- Click on Trade on one of your live or demo trading accounts to open the web platform.
- Search for your symbol at the top of the search window.
- Click Create New Order in the bottom window to open a trading ticket to input your trade size, stop loss and take profit level.
Investing in India ETFs: Pros & Cons
Investing in India can be an enticing prospect as the country’s economy has been growing at a rapid pace in the last few decades, averaging around 6.21% from the period of 2006 to 2023. India’s economy has somehow managed to miss most of the major recessions that the United States and the Eurozone have experienced in the same period. One could argue, therefore, that India’s economy shows a certain resilience.
What’s more, multiple analysts and economists share a positive outlook on how the country will develop in the coming decades. India’s economy is expected to continue growing, and the country is on course to become one of the leading global economies by 2050. India’s equity market is currently the fourth largest in the world, having already surpassed that of European cornerstone economies like the UK and France.
With a population of more than 1.4 billion people, a growing portion of which is becoming middle-class, the country is not likely to run out of labourers for its growing economy. The middle class in India is estimated to be around 430 million people, or one in every three Indians. More and more Indians are finding their way into better-paying jobs, and their disposable income is increasing, making the potential consumer base for companies to target in India even larger.
There are a couple of reasons why some investors remain wary of investing in Indian companies. The first reason is that the Indian rupee’s performance against Western currencies like the dollar or the euro has not been stellar. Since 2008, the value of the rupee has fallen nearly 50% against the U.S. dollar. This means that foreign investors who bought into Indian companies in 2008 would see 50% of their profits vanish if they cashed out their Indian equity back into dollars in 2023.
The rupee’s poor performance is in part a planned exercise, as India is looking to become the world’s leading exporter. By devaluing its currency, India makes its goods and services more attractive to foreign buyers. This economic strategy might benefit India in the long run, but the same might not hold true for foreign investors.
Another reason why some investors choose to pass up on India’s growing economy is that investing in India is heavily restricted to foreigners. In fact, to buy a specific Indian stock, a foreign investor must first become a Qualified Foreign Investor (QFI), which is not considered easy and involves visiting India and registering at a number of different agencies and departments. An option most UK-based investors have is to buy into mutual funds or India ETFs like the ones mentioned in this article.
Continue Reading:
- What are ETFs? ETFs Explained
- How to Trade ETFs with €1,000
- The CFD Trading Guide
- How to Trade Asia Markets
FAQs on Best India ETFs
Which ETF is best in India?
Some of the world's most well-known India ETFs include the iShares India 50 ETF, WisdomTree India Earnings Fund ETF and the iShares MSCI India ETF. As always, the answer to which investment product is ‘best’ is: it depends. Each investor has their own personal financial situation and investment goals to consider whenever they make decisions about which stocks or ETFs to include in their portfolio.
How do I find the best ETF in India?
What is the ‘best’ India ETF is heavily dependent on the investor’s personal goals and financial situation. A good way to perform research on India ETFs, however, is to start with the ETFs issuer’s website. The ETFs prospectus contains a broad description as well as many detailed pieces of information regarding the ETF. Once an investor has determined a couple of ETFs that might fit their portfolio, they would do well to perform some more research on the companies themselves that the ETFs hold. If the ETF tracks an index, the investor could instead consider whether the respective index represents a sound investment for them.
Which is the largest ETF in India?
The iShares MSCI India ETF is the largest ETF in India. The fund contains around $6 billion in capital. The iShares India 50 ETF manages around $650 million in capital, and WisdomTree’s India Earnings Fund ETF has around $1 billion in capital under management.
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