6 Best India ETFs for 2022

This article analyzes the best India ETFs that you can buy. 

India is on its way to becoming the fastest-growing major economy in the world. It expects to see a staggering 11% year-over-year increase in its GDP in the coming quarter.

Thanks to several exchange-traded funds, US investors can gain portfolio exposure to India’s economic growth in a single investment vehicle.

Let’s see which India ETF, if any, is best for your portfolio:

Best India ETFs: At A Glance

Here are the six best India ETFs:

• iShares MSCI India ETF (INDA)
• WisdomTree India Earnings Fund (EPI)
• iShares India 50 ETF (INDY)
• iShares MSCI India Small-Cap ETF (SMIN)
• Invesco India ETF (PIN)
• Direxion Daily MSCI India Bull 2X Shares (INDL)

Next, we’ll analyze the characteristics, performance, and objectives of these funds to see what makes them special.

#1. iShares MSCI India ETF (INDA)

• 1-Year Performance: +22%
• Expense Ratio: 0.65%
• AUM: $6.2 billion
• Number of Holdings: 108

The iShares MSCI India ETF (INDA) provides targeted access to 85% of the Indian stock market.

INDA offers portfolio exposure to 108 of India’s most established large- and mid-sized companies. These are predominantly Financial, Information Technology, and Energy companies.

Its top holding, Reliance Industries is a multinational conglomerate company primarily involved in the energy sector. Its market cap of $232 billion makes it the world’s 47th most valuable company.

Generally speaking, this ETF is to India’s stock market as an S&P 500 fund is to the US stock market.

INDA Top Holdings:

• Reliance Industries Limited (BOM:500325) 9.19%
• Infosys (BOM:500209) 8.25%
• Housing Development Finance Corp. Ltd. (BOM:500010) 6.02%
• ICICI Bank Limited (BOM:532174) 5.37%
• Tata Consultancy Services (BOM: 532540) 4.60%

#2. WisdomTree India Earnings Fund (EPI)

• 1-Year Performance: +27%
• Expense Ratio: 0.84%
• AUM: $1.0 billion
• Number of Holdings: 473

The WisdomTree India Earnings Fund (EPI) uses a valuation-centric approach to provide exposure to profitable Indian companies.

It has a similar industry breakdown as INDA, primarily Financials, Energy, Materials, and Energy, but enables access to companies of all sizes, unlike INDA.

Around 58% of the fund is large-cap, 28% mid-cap, 9.78% small-cap, and 4.05 micro-cap.

EPI has the same primary holdings as INDA but is less concentrated in those names because it’s spreading allocations across far more names.

We view EPI as a total stock market ETF for the Indian economy, serving a similar function as the Vanguard Total Stock Market Index Fund ETF (VTI) does for the US.

EPI Top Holdings:

• Reliance Industries Limited (BOM:500325) 7.79%
• Infosys (BOM:500209) 5.63%
• Housing Development Finance Corp. Ltd. (BOM:500010) 5.04%
• ICICI Bank Limited (BOM:532174) 3.96%
• Tata Consultancy Services (BOM: 532540) 3.00%

#3. iShares India 50 ETF (INDY)

• 1-Year Performance: +21%
• Expense Ratio: 0.90%
• AUM: $720 million
• Number of Holdings: 54

The iShares India 50 ETF (INDY) provides portfolio access to 50 of the largest Indian stocks in a single fund.

This ETF pulls the largest names out of the iShares MSCI India ETF (INDA) and gives them a larger allocation.

INDY’s allocation to financials is substantially more than that of INDA, allocating 36% of assets compared to 24%.

The remaining sector allocations are respectively proportional to one another.

Deciding between INDY and INDA pretty much comes down to your diversification preference and tolerance for fees.

INDY Top Holdings:

• Reliance Industries Limited (BOM:500325) 10.59%
• Infosys (BOM:500209) 8.56%
• HDFC Bank (BOM:500180) 8.11%
• ICICI Bank Limited (BOM:532174) 6.94%
• Housing Development Finance Corp. Ltd. (BOM:500010) 6.04%

#4. iShares MSCI India Small-Cap ETF (SMIN)

• 1-Year Performance: +43%
• Expense Ratio: 0.74%
• AUM: $428 million
• Number of Holdings: 323

The iShares MSCI India Small-Cap ETF (SMIN) provides exposure to 320 small-cap Indian stocks.

SMIN is better constructed to capture the growth of the Indian economy compared to the previously mentioned funds that are heavily allocated to well-established Indian conglomerates.

However, this makes SMIN far more volatile than INDA, EPI, and INDY. But every investment comes with its tradeoffs.

BlackRock recommends pairing SMIN and INDA to guarantee comprehensive exposure to India.

While that investment strategy comes with plenty of bias, it would cover all of your bases. But so does the WisdomTree India Earnings Fund (EPI) that invests in Indian companies of all sizes.

In our estimation, SMIN has the highest risk-to-reward profile of any India ETF on the market.

SMIN Top Holdings:

• BlackRock Cash Funds Treasury (SL Agency Shares) 2.48%
• Zee Entertainment (BOM: 505537) 1.42%
• Voltas Limited (BOM: 500575) 1.38%
• Crompton Greaves Consumer Electricals (BOM:539876) 1.21%
• Astral Limited (BOM: 532830) 1.14%

#5. Invesco India ETF (PIN)

• 1-Year Performance: +22%
• Expense Ratio: 0.78%
• AUM: $130 million
• Number of Holdings: 142

The Invesco India ETF (PIN) provides exposure to large- and mid-cap Indian stocks.

While much smaller by assets under management, this ETF is very similar to the iShares MSCI India ETF (INDA).

PIN’s main difference from INDA is its leading sector allocations.

PIN is slightly more balanced amongst the Financial, Information Technology, Energy, and Materials sectors.

Its leading sector is Information Technology while INDA’s is Financials.

Admittedly, these allocations are marginally different and may just be a result of varying categorizations of companies on behalf of the providers.

PIN also has a higher expense ratio than INDA, collecting 0.78% of your investment compared to 0.65%.

PIN Top Holdings:

• Reliance Industries Limited (BOM:500325) 9.61%
• Infosys (BOM:500209) 9.18%
• Housing Development Finance Corp. Ltd. (BOM:500010) 6.34%
• Tata Consultancy Services (BOM:532540) 5.49%
• Hindustan Unilever Limited (BOM:500696) 2.81%

#6. Direxion Daily MSCI India Bull 2X Shares (INDL)

• 1-Year Performance: N/A
• Expense Ratio: 1.33%
• AUM: $100 million
• Number of Holdings: 5

The Direxion Daily MSCI India Bull 2X Shares seeks daily investment results of 200% of the performance of the MSCI India Index.

INDL is designed for day-trading volatility in the Indian stock market, with leverage.

So if INDA trades up 2% on the day, INDL will be up 4% on the day.

If INDA trades down 3% on the day, INDL will be down 6% on the day.

This ETF is not designed to be held for periods greater than a day. For example, investors should not expect INDL to return 2X INDA over a month.

The compounding effects and leverage will result in unpredictable differences if INDL is held beyond a period of a day.

Additionally, we think investors should familiarize themselves with the risks of using leverage before using it.

This is an emerging market ETF that uses leverage – that’s why the expense ratio is so incredibly high.

INDL Top Holdings:

• iShares MSCI India ETF (INDA) + leverage

Best India ETFs: Frequently Asked Questions

Which is the best ETF to buy in India?

We believe that the iShares MSCI India ETF (INDA) is the best ETF to buy in India because it provides the best mix of asset exposure and fees amongst the available India ETFs.

Is INDA a good ETF?

INDA is a good ETF for investors seeking diversified exposure to the Indian stock market. It provides access to 85% of the Indian stock market, primarily investing in large- and mid-cap companies.

Bottom Line: Best India ETFs

You pay a premium for emerging market exposure, which is clear considering the high expense ratios present throughout this article.

However, we don’t recommend picking up pennies in front of a steamroller. If you’re confident in India’s continued economic rise, you now have plenty of investment opportunities to choose from.

This article is for informational purposes only. It is not intended to be investment advice. Read our strict editorial guidelines and public equities research methodology to learn more about how selected the Best India ETFs.