For investors who want to diversify in fast-growing markets beyond the US, China has been the obvious choice. But the next decade may belong to…India. While the Chinese economy has struggled from government crackdowns against its tech giants and a slumping property market, India has rebounded more strongly from the pandemic than any other major nation, with a 9.5% GDP growth rate last year and expected growth of 8.5% for 2022. (The US grew 5.7% last year, its best showing in four decades). Despite this surge, inflation in India remains under control and the country is benefiting from Prime Minister Modi’s push to privatize state-owned enterprises…a digital economy still in its infancy…and a population of 1.4 billion, half of which is under the age of 25. Biggest wild card this year: India’s vaccination rates lag developed nations so the country could be hit hard if another COVID variant emerges.
Investing in individual Indian stocks can be complicated, so gain exposure through diversified exchange-traded funds (ETFs). My favorites now…
iShares MSCI India ETF (INDA), the category’s largest and oldest offering, invests in 100 of the country’s largest companies, mostly in financial services, energy and tech, including oil-and-gas refiner Reliance Industries and global IT-services provider Infosys Ltd. Annualized five-year performance: 10.2%.
WisdomTree India Earnings ETF (EPI) has similar sector weightings but holds more than 470 stocks with an emphasis on small- and midsize companies. It screens for profitable businesses and emphasizes investments that have strong earnings over the past 12 months. Annualized five-year performance: 10.6%.