Q&A With Gordon Pape: Investing In India

India’s stock market is booming. How can I get in on the action?

Q – Many authors compare India’s booming markets to what happened in China some years ago when their valuations were growing exponentially. How can we invest to participate in this?
I heard about Goldman Sachs ActiveBeta Emerging Markets Equity ETF (NYSE: GEM). Part of this ETF is invested in India. How would you rate this? – Pierre D.

A – This ETF is coming off a strong year, with a gain of 25.6 per cent (market price) over the 12 months to the end of February. However, you’re not getting much exposure to India here. It represents just 9.7 per cent of the fund’s assets, less than China (27.1 per cent), Korea (15.4 per cent), and Taiwan (10.8 per cent).

There are many ETFs that invest exclusively in India. The largest is the iShares MSCI India ETF (NYSE: INDA), which was showing a year-to-date return of 16.1 per cent as of March 27. There are also some India small-cap funds, which have been shooting out the lights recently. Look at the VanEck Vectors India Small-Cap Index ETF (NYSE: SCIF), which is ahead 27.2 per cent this year.

But India funds can be very volatile – SCIF lost almost 5 per cent in 2016 and shows a cumulative loss of 44 per cent since it was created in 2010. Be sure you understand the risks before you invest. – G.P.

 

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