ETF providers including Market Vectors and GlobalX have already provided smaller-cap exposure to China and Brazil, which make up half of the so-called BRIC countries -- Brazil, Russia, India and China. It would be reasonable to think a Russian small-cap fund may be coming soon.
The underlying index for India Small Cap has 75 holdings ranging in size from $100 million to $2 billion, with a median market cap of $473 million. Two technology industries (IT services and software) comprise 16% of the ETF, followed by banks at 12%.
Part of the idea behind exposure to small caps is to capture the "story on the ground," which is often obscured in the mega-cap funds. As such, the small-cap fund allocates 19% to consumer stocks. The position in banks captures the story on the ground in terms of financing startup businesses, which will be a big part of India's future development.India Small Cap doesn't take significant single-stock risk, with the largest holding, Patni Computer Systems, having only a 3.4% weighting. Most of the names will be unfamiliar except for the occasional Indian subsidiary of an American company such as Dish TV (DISH) or the smaller subsidiary of a large Indian conglomerate such as Tata Communications (TCL). There is a presentation about investing in Indian small-cap stocks on the EG Shares website with all sorts of statistics about the attractiveness of the country and of this segment of the market related to growth, demographics, education and relatively low debt. It's a useful read for anyone interested in the country. While the numbers are compelling, the big picture is easy to understand. A big driver for many emerging markets has been the modernization of society and an ascending middle class. Specific to India is outstanding education, resulting in many people taking outsourced professional jobs making $10,000 to $20,000 a year, which, while low by American standards, is game-changing in India. When one considers that there are more than 1 billion people and the average age is around 25 years old, the India theme has many years to play out.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV