U.S. investors, buoyed by optimism about India’s economy and booming stock market, have been moving money into exchange-traded funds that focus solely on that country. U.S.-listed India Exchang Trade Funds (ETFs) have added over $2 billion in net new assets so far this year, outshining other emerging market funds. That brings the total assets of the 10 India ETFs tracked by Morningstar, an independent investment research company, to $6.3 billion, up roughly 47 percent since January.
Those inflows dwarf the $272 million added to broad emerging markets ETFs this year and represent the greatest single-country net asset gain when compared with U.S.-listed ETFs that focus on Brazil, China, Russia or South Africa. While the strong U.S. dollar has pressured global currencies this year, the Indian rupee is relatively unchanged against the U.S. dollar since January and so far has not significantly affected U.S.-listed India ETF returns.
Analysts and investors expect Modi’s push for economic reform to rejuvenate earnings and create jobs. Investor appetite has driven the MSCI India Index up 28.5 percent year-to-date – its highest in more than two decades.
The so-called BRICS group – Brazil, Russia, India, China and South Africa – all moved together a decade ago, but now India is pulling ahead ofthe others, said Dennis Hudachek, a senior analyst with ETF.com.