ETF News

While much attention has been given to the performance of the US equity market thus far in the year, an underrated story is the strong performance of Indian equities. Year-to-date, as of June 30th, 2024, the performance of the MSCI USA GR Index and MSCI India GR Index has been 14.88% and 17.11%, respectively. As illustrated in the following chart, over the past year, the MSCI India GR Index has outperformed the MSCI USA Index by approximately 10 percent (34.89% vs 24.65%).

India's Economic Resurgence: Policy, Infrastructure, and Digital Transformation

The Indian election earlier this year resulted in a coalition government led by Prime Minister Narendra Modi. While many were surprised that Prime Minister Modi's party lost its majority leadership, forming a new government with him remaining at the helm helped shake off the market's concerns over the direction of economic reforms.

In recent years, the market's confidence in India's growth picture has driven higher stock valuations, supported by the numerous economic initiatives undertaken by the Indian government. The Indian government has prioritized infrastructure development, with substantial investments in transportation, energy, and urban development.

Projects like the Bharatmala and Sagarmala initiatives aim to improve road and port connectivity, enhancing trade and economic efficiency. Additionally, the "Make in India" initiative continues to attract global manufacturers, boosting the country's industrial base and positioning the nation as a manufacturing powerhouse with a skilled workforce and competitive cost structure.

Another growth area is India's digital economy, which is growing rapidly, driven by initiatives such as Digital India and the proliferation of internet connectivity. A defining feature of India's digitization drive is the government's lead in building digital infrastructure. This is reflected in India's healthy ecosystem of tech startups in areas like e-commerce and online payments, some of which are listed publicly. India may also be positioned to benefit from artificial intelligence (AI). New AI tools and techniques could be used to improve healthcare and education. Indian IT services companies have historically profited from tech disruption by building products and services catering to major tech shifts. Firms that adapt successfully could play critical roles in lowering costs and boosting revenues for clients around AI.

Accessing India's Growth Potential Through this ETF

For investors looking to gain exposure to India, the iShares India ETF (Ticker: XID) provides comprehensive exposure to a broad cross-section of Indian equities. XID tracks the performance of the Nifty 50 Index, which represents the performance of the top 50 companies listed on India's National Stock Exchange (NSE). These companies are selected based on market capitalization and liquidity, providing a benchmark for the Indian equity market.

Takeaway

Though the performance of the US equity markets has received headline attention, compelling investing opportunities remain in other areas globally. Within emerging market equities, India's economic resilience and growth potential presents a compelling opportunity for investors seeking exposure to one of the world's most dynamic and rapidly growing economies.

Please note this article is for information purposes only and does not in any way constitute investment advice. It is essential that you seek advice from a registered financial professional prior to making any investment decision.