WisdomTree: Are Investors Under-Allocated to India?

ETF Trends

India has the world’s second-largest population 1 and one of the best long-term economic growth rates of all emerging market countries. 2 India also has an educated workforce and seems to embrace all forms of technology—with, notably, about twice as many cell phone subscribers as there are people in the United States.

But with India being one of the so-called BRIC countries, we have to ask: Are investors potentially under-allocating? We believe they are.

Our Assets-Under-Management (AUM) Figures

We have reviewed all the listed ETFs in U.S. exchanges to determine ETFs focused on tracking the performance of equity market indexes specific to single emerging market countries.

Throughout this piece, we’ll reference AUM in the following format: (“EM Country” AUM) for clarity, and this represents the total assets in U.S. exchange-listed ETFs tracking equity indexes of that country (data source: Bloomberg, as of March 31, 2013). We also limit our study to the top 10 countries by AUM, based on the MSCI classification of 21 emerging markets.

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• Brazil & China: China AUM is by far the highest, followed by Brazil AUM. After Brazil, there is quite a drop-off.

• South Korea & Mexico: These countries are not part of BRIC, but the asset picture indicates significant interest. Both are ahead of the other two BRIC country AUMs, India and Russia.

Based on Economic Size and Growth Potential, Investors Appear Under-Allocated to India

One metric that suggests investors are under-weight: the relative size of the various economies. 

Gross Domestic Product (GDP) by Country in Both U.S. Dollars & According to Purchasing Power Parity (PPP) Exchange Rates

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Next page: Economic growth

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