Individual Investors

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How to use India in your investments

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India’s star is on the rise with many nations, including Australia, seeking to forge closer trade partnerships. Investors may wonder whether they should consider investing in India and the ways in which to include it in their portfolios. There are a range of options for investors to consider.

Why consider India for your investments?

Many investors are interested in emerging markets as a diversification strategy in their portfolio, with the Asian region typically attractive. The Asian region has a well-documented growth case in terms of a growing middle-class and economic prospects. Though China is typically front of mind, investors shouldn’t discount other countries, such as India, as valid options.

Investors should be aware that India has continued to struggle with COVID-19, however, it is starting to show signs of recovery.

India’s future is dominated by three key growth drivers:

  1. Infrastructure investment – India has committed to a US$1.4tr infrastructure investment by 20251 which can offer short term benefits such as employment, and longer term benefits in the form of useful water management, ports and roads to improve access and lifestyle for a population as well as businesses.

  2. Reform and fiscal policies – government reforms, such as the simplified GST program, have assisted in opening the country to internal and foreign business investment. There are also active efforts to support the ongoing growth of the country through fiscal spending and monetary policy.

  3. Consumption – India is expected to see the percentage of households in poverty drop from 15% to 5% by 20302 posing tremendous business opportunities as more consumers are able to afford more than the basics.

Ways to invest in India

It can be difficult for investors to directly access the Indian market for listed shares. From this perspective, investors could consider other options such as:

  • Direct investment in companies with business operations in India listed in Australia or internationally.

  • Actively or passively managed funds that focus on Asia, themes relevant to Asia or India, or specifically focus on India.

ETFS-NAM India Nifty 50 ETF (ASX Code: NDIA) is the only fund in Australia that offers exposure to the Indian economy via its benchmark index, the NSE Nifty50 Index. NDIA includes exposure to the 50 largest and most liquid companies listed on the National Stock Exchange of India (NSE) and represents more than 60% of the market capitalisation of India.

How to use India in a portfolio

Investors can consider investing in India from a few perspectives.

  1. Regional diversification

    Diversification is used by many investors to manage risks specific to countries and regions. Spreading investments across a range of regions, such as India, can assist with this as well as offering exposure to different economic drivers compared to Australia or the US. From this perspective, it could be considered part of the core investments within a portfolio.

  2. A thematic investment

    Investors may consider an investment in India as a form of exposure to the broader trend for the growth of the middle-class across Asia. This may see the investment form part of the satellite portion of a portfolio to tilt towards thematic investments.

  3. Growth opportunity

    Investors looking for long-term growth opportunities could consider India within growth allocations in either the core or satellite of a portfolio given its prospects and activity.

For more information on investing in India or ETFS-NAM India Nifty 50 ETF (ASX Code: NDIA), please speak to ETF Securities.

1 Source: India 2030: exploring the Future; National Infrastructure Pipeline

2 http://www3.weforum.org/docs/WEF_Future_of_Consumption_Fast-Growth_Consumers_markets_India_report_2019.pdf