ETF providers moving into Indian equities offerings

ETF Securities launched Australia’s first Indian equities exchange traded fund (ETF) on Friday with the Reliance India Nifty 50 ETF which would offer investors access to the US$2.6 trillion economy by, as the name suggests, tracking the Nifty50 Index, which holds the 50 biggest companies listed on India’s National Stock Exchange (NSE).

While BetaShares announced earlier this month that it was introducing an Indian equities ETF, ETF Securities beat it to the finish line in terms of listing the fund on the Australian Securities Exchange.

India was a strong growth prospect globally, with the World Bank forecasting its economy would grow by 7.5 per cent in each of 2019/20 and the following financial year. On top of that, its growing emerging middle class had seen growing demand for consumer discretionary goods and increasing wages, further spurring growth.

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Head of ETF Securities Australia, Kris Walesby, also pointed to the recent re-election of Narendra Modi’s Bharatiya Janata Party as a positive for the Indian economy, believing that political stability would allow the benefits of recent reforms to Goods and Services Tax and bankruptcy laws to continue filtering through in the form of stronger earnings by the country’s major companies.

Further, significant improvements in infrastructure, particularly in road and rail systems, would help drive economic growth, the ETF company’s co-head of sales, Kanish Chugh, who recently returned from India, said.

The Indian market had traditionally been difficult for offshore investors to access due to both strict foreign investment rules and the need for local knowledge. The move of ETF providers into that space hence boded well for investors seeking to capitalise off the nation’s growth without the fees or high minimum investments usually associated with managed funds in the market.

The Nifty50, which held the 50 biggest companies listed on India’s National Stock Exchange (NSE), was an ideal index to track to gain such access, according to NSE Indices Limited chief executive, Mukesh Argawal.

“Nifty50 has become synonymous with equity markets and reflects the growth story of Indian capital markets. ETF on Nifty50 … will help institutional and retail investors in Australia to efficiently participate in the world’s fastest growing economy,” he said. “The success of Nifty50 index is evident from the widespread acceptance of Nifty50 for launch of India access products globally.”

The index was up nearly 19 per cent over the last year and almost 15 per cent over the five years to May’s end, and included companies such as the HDFC Bank, Tata Consultancy Services, the Housing Development Finance Corp, and Hindustan Unilever.

The ETF, which carried the ASX code NDIA, would run at fees of 0.85 to one per cent and was offered in conjunction with one of India’s largest asset managers, Reliance Nippon Life Asset Management.

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whilst you say ETF Securities beat Betashares in getting their India ETF to market,
the Betashares product will be different in providing a tilt to quality stocks which according to them
since 2010 has outperformed the straight index by 4% p.a.
and in my view the Betashares product will be a superior offering yet still low cost.

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