Investing

Next Big Thing? Global X Launches First Active India-Focused ETF

Liam Gibson

Published: August 21, 2023 6:55 am

Last Updated: August 21, 2023 11:31 am

Investors looking for big gains from international markets have a new India-focused fund to consider. 

Global X listed the Global X India Active ETF (NDIA) on the NYSE Arca on August 18. The launch is significant for Indian investing as it represents the U.S. market’s first active single-country ETF exclusively targeting India.

NDIA was launched concomitantly with another emerging market fund, the Global X Brazil Active ETF (BRAZ). 

Global X sees market-friendly structural reforms, big government spending, and low labor costs all make India particularly alluring to investors. 

“With attractive demographics, a strong education system, and a democratic governance system, we believe India represents one of the top structural opportunities in the world,” the firm said. 

Awakening Giant

India is already a formidable economic player, and its influence is set to grow over the coming decades, potentially rivaling China. There are many reasons to be confident in the long-term growth potential of India. 

It boasts a burgeoning youthful population. This enviable demographic dividend will lead to a robust labor force and consumer market if appropriately leveraged. Rapid urbanization and an expanding middle-class expansion is set to boost demand across a range of sectors like technology, healthcare, and finance. 

By 2030 India alone will be home to 140 million middle-income families, representing nearly 80% of all households, according to World Economic Forum estimates. 

Indeed, as the golden era of Chinese growth recedes further into the rear vision mirror, India is starting to capture the imagination of Wall Street. Goldman Sachs now predicts the Indian economy will eclipse the U.S. by 2075. Silicon Valley is also positioning itself to ride India’s wave. While Apple is redrawing its intricate supply chains to manufacture more iPhones in the country, Amazon has pledged to expand its investment footprint there to $26 billion by 2030. 

The Bigger They Are…

However, India is not too big to fail. As Goldman Sachs points out, to really cash in on its demographic dividend, India must increase both its worker productivity rate and labor force participation, including creating more opportunities for women, who remain a largely untapped economic force.

As with all emerging markets, political instability, regulatory uncertainties, currency volatility, debt vulnerabilities, and government intervention pose outsized risks. Prudent investors will carefully assess their exposure to these factors when investing in India. 

The recent saga of Guataum Adani’s staggering collapse serves as a cautionary tale. After New York-based Hindenburg Research released a report in January accusing the industrialist (formerly India’s richest man) of widespread fraud and “brazen stock manipulation,” the share price of his eponymous conglomerate plummeted around 50% in just ten days, erasing almost half his fortune. The episode raises serious questions among investors about the health of India Inc. at a time when the country is doing its utmost to attract foreign capital.  

So far, India has seen relatively substantial growth in 2023, although it has not matched the returns of the S&P 500. India’s Nifty 50 index, which tracks the top 50 companies listed in the country, is up almost 7% year-to-date. 

NDIA has an expense ratio of 0.75% and is currently trading at around $25.

Originally posted at Wealth of Geeks.