Focus on India

This week saw Fiona Nicolson talking to Chris Lo, head of managed and indexed portfolio solutions at Columbia Threadneedle, who says: "Our thesis was that India is a growing country in terms of population, but more importantly, that the country was also undergoing a transformation – to where we see it now, in 2024."

We also published a research note from CFRA’s Aniket Ullal this week which also focused on India, looking at ETFs with exposure to India after the unexpected election results, with the incumbent Bharatiya Janata Party (BJP) retaining fewer seats than projected. Ullal says: "The 17 India-focused ETFs in the US had USD20 billion in assets as of July 10, 2024, after taking in USD4.9 billion this year. Understanding their different sector exposures is important since the Indian IT sector is driven by global tech spend, unlike the more domestically oriented financial and consumer sectors."

Ullal notes that US investors will also need to consider currency movements since the NAVs of these funds are denominated in dollars, and therefore, any depreciation in the Indian rupee dilutes returns in dollar terms. He writes that, as of July 10, 2024, the Indian rupee had depreciated by 18 per cent against the US dollar in the trailing five years. "When the dollar appreciates relative to the Indian rupee, ETFs like the WisdomTree India Hedged Equity Fund (INDH) will have a higher return than a corresponding unhedged ETF, he notes.

Another strong topic this week was active ETFs, with BlackRock publishing a paper predicting that global active ETF assets will quadruple to USD4 trillion by 2030, from USD900 billion as of June 2024. BlackRock’s expectations for growth underscore how active ETFs are at the nexus of innovation within the industry, accounting for 76 per cent of all US-listed ETF launches in 2023, and 43 per cent of global ETF launches, it writes. We also had news this week that BlackRock’s iShares business’s assets are now over USD4 trillion.

HANetf also published their first quarterly ETF review, noting that active ETFs in Europe have seen USD5.9 billion inflows YTD, now representing USD40 billion AUM, over 2 per cent of European ETF assets, with a total of 23 active ETF issuers in Europe.

Beverly Chandler, Managing Editor

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