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A Taiwan ETF Becomes An India Fund

ETF Professor

First Trust, one of the largest issuers of smart beta exchange traded funds, is throwing in the towel on the First Trust Taiwan AlphaDEX Fund. First Trust is reconfiguring, rather than shuttering, the fund. 

The First Trust Taiwan AlphaDEX Fund is now the First Trust India NIFTY 50 Equal Weight ETF (NASDAQ: NFTY). The fund had $1.97 million in assets under management as of April 16, according to issuer data.

What Happened

First Trust has an expansive lineup of ETFs following the AlphaDEX methodology, which focuses on “growth factors including three-, six- and 12-month price appreciation, sales-to-price and one-year sales growth, and, separately, on value factors including book value to price, cash flow to price and return on assets,” according to the issuer.

The First Trust Taiwan AlphaDEX Fund struggled to gain traction with investors, prompting the change to the First Trust India NIFTY 50 Equal Weight ETF.

Why It's Important

Prior to NFTY being launched, there were a dozen dedicated India ETFs trading in the U.S. The two largest members of that group are the iShares MSCI India ETF (NYSE: INDA) and the WisdomTree India Earnings ETF (NYSE: EPI), which have $5.38 billion and $1.72 billion in assets under management, respectively. 

India is one of the largest developing economies. The country is expected to post economic growth of 7.4 percent in its current fiscal year, up from 6.7 percent in fiscal 2018. Growth in Asia's third-largest economy could accelerate to 7.8 percent in fiscal 2020.

What's Next

NFTY is tracking an equal-weight equivalent of the Nifty 50 Index, a gauge of the largest Indian companies.

The NIFTY50 Equal Weight Index represents an alternative weighting index strategy to its market capitalization weighted parent index, the NIFTY 50. The index includes the same companies as its parent, however, weighted equally,” according to NSE India.

NFTY allocates over two-thirds of its combined weight to the technology and financial services sectors. The ETF's annual fee is 0.80 percent, or $80 on a $10,000 investment.

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