This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Emerging Global Launches India Sector Fund

The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.

NEW YORK ( TheStreet) -- Global X rolled out sector funds for China a little over a year ago. Shortly thereafter, it launched two sector funds for Brazil, Now, Emerging Global Shares is first to market with an India sector fund with the EG Shares India Consumer ETF (INCO).

The fund has 30 holdings, a 0.89 expense ratio and won't pay much of a dividend. There are 14 industries in the fund with the larger ones being automobiles and personal products each at 15%, media getting 10%, along with textiles, apparel & luxury goods also with 10%. The mix between consumer goods and consumer services is roughly 50/50.

The largest holdings in the fund are about 5% each with some names that might be familiar like Hindustan Unilever, Hero Honda Motors and Colgate Palmolive India. The parent companies will, of course, be familiar, and these are the Indian subsidiaries. But this is not the case with every company like Asian Paints Ltd. or Mahindra and Mahindra Ltd.

A big part of the investment thesis for the BRICs (Brazil, Russia, India and China) and other emerging markets is the ascending middle class. Per capita income in India is currently $1,219 which is obviously a very low number but is up 18% from the previous year. Some estimates, like from StanChart, call for 9% annualized growth for many years into the future.

If that analysis is correct it means more money spent on all aspects of consumer life from toothpaste and food to better housing and new furniture to TVs and cars. The thesis is simple and if it plays out then this fund should capture that tailwind.

Investing in India has risks with a very poor population, corruption that impedes progress and creates inefficiencies in government, and a very volatile stock market which is down 17% year to date. Going forward, progress with the modernization will be lumpy as will equity market returns. Over any short period of time, a poorly entered trade could result in a swift loss as the market is moved regularly by surprise policy moves by the Reserve Bank of India, the central bank.

While some may be skeptical about sector funds for emerging-market countries it seems reasonably intuitive that in a country like India or Russia, if there are ever sector funds for Russia, it would be preferable to avoid a sector like financials. Consumer stocks make sense in India because they capture the ascending middle class. In Russia, it might be preferable to only own resource stocks as this is where the wealth in Russia comes from.
1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG
INCO $32.69 0.00%
AAPL $113.29 0.00%
FB $91.01 0.00%
GOOG $630.38 0.00%
TSLA $248.48 0.00%

Markets

Chart of I:DJI
DOW 16,643.01 -11.76 -0.07%
S&P 500 1,988.87 +1.21 0.06%
NASDAQ 4,828.3250 +15.6170 0.32%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs