Coming Soon: India ETF

"So far, ETF investors have been mostly shut out of India, but that could be about to change."

So says the WSJ’s Ian Salisbury. In an article this week, he discussed a new global index fund development. Apparently, several firms are working on ETFs that will track either the largest Indian companies (Barclays), or a hybrid of US/Indian firms (Amvescap). These could be available to investors before year’s end.

Here’s a quick excerpt:

Barclays iPath MSCI India Index ETN will follow the MSCI India Total Return Index, according to the filing. Among the index’s 68 components, top holdings include Infosys Technologies Ltd., Reliance Industries Ltd., and Icici Bank Ltd., according to the ETN’s prospectus.

The MSCI index is broader than the Bombay Exchange Sensitive Index, or Sensex, the 30-component index that is often quoted as the benchmark for the Indian stock market much the way the Dow Jones Industrial Average is in the U.S. In addition, the MSCI index adjusts the weightings of its components to comply with foreign investment rules.

The new Barclays investment product won’t be an exchange traded fund, but an "exchange traded note," a debt security issued by Barclays, which promises investors the returns of the index. Investors who hold ETNs take on the risk that Barclays could fail to pay them. However, they don’t bear risks associated with "tracking error," the difference between the return of an index mutual fund and its underlying benchmark . . .

Mutual-fund ratings firm Morningstar Inc. says it tracks only two open-end India mutual funds, the Eaton Vance Greater India Fund, which launched in 1994, and the Matthews India Fund, which appeared last year. By contrast, Morningstar follows more than a dozen China-oriented funds. China’s economy "is bigger and there is generally more interest," says fund analyst Arijit Dutta. "But, arguably, India is a deeper and more liquid market," he adds.

Mr. Dutta notes that broader emerging-markets funds, which Morningstar generally recommends to investors over single-country funds, put, on average, about 5% of their assets in India — an amount that is more or less equal to the allocation they give China and Hong Kong combined. Closed-end funds that invest in India include Blackstone Asia Advisors LLC’s India Fund and the Morgan Stanley India Investment Fund.

Interesting idea, and makes lots of sense.

Too bad its only their large cap — I’d like to see midcap or allc ap versions also . . .

Source:
ETF Investors See Passage to India
Ian Salisbury
WSJ, December 6, 2006; Page C11
http://online.wsj.com/article/SB116536969902741807.html

See also:

India ETF coming but don’t get too excited
Aaron Pressman
BW, June 16, 2006

http://www.businessweek.com/investing/insights/blog/archives/2006/06/india_etf_comin.html

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Another edition of our new series:  Blog Spotlight.

We put together a short list of excellent but somewhat overlooked
blog that deserves a greater audience. Expect to see a post from a
different featured blogger here every Thursday evening,
around 7pm.

Next up in our Blogger SpotlightRuss Winter’s Economic & Market) Watch. A brief background: Russ was a broker for major firms in the Pacific NW for fifteen years in the late 70s and 80s. Moved on to land development, and vintage apartment ownership. He is now semi-retired and a cashed out bear, hunkered down in the Portland, Oregon area, watching the world go around.

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This week’s topic:  Understanding Consumer Ponzi Finance   

Ponzi’ finance units must increase outstanding debt in order to meet its financial obligations.”
-Hyman Minsky

Credit Suisse on a monthly basis puts out one of the most data filled reports in the biz on mortgage and consumer finance. A careful reading of the latest issue, enables one to piece together the nature of the American asset Bubble consumer financing Ponzi scheme. A look at the following chart on housing cash out refinancings, clearly illustrates Joe Soccer Mom’s (JSM) largely unrestrained ability (so far), to effectively service their old debts and continue spending, with new debt. That’s true even with the kind of extremely low levels of cash in the bank, that I pointed out in my blog on demand deposits, earlier this week.

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