Australia’s first Indian equities ETF has been launched by ETF Securities offering an opportunity to take advantage of the world’s fastest-growing major economy.
ETF Securities is partnering with Reliance Nippon Life Asset Management on the fund – code NDIA - which will track the Nifty50 Index of the biggest companies on India’s national Stock Exchange.
ETF Securities points out that the Indian economy is predicted to grow 7.5% this year and is tipped to overtake China as the world’s largest economy.
“India is the most dynamic economic growth story globally, but, until now, it has been difficult for investors to access,” said Kris Walesby, head of ETF Securities Australia. “This product offers investors the chance to gain exposure to a $US2.6 trillion economy that still has tremendous potential to grow as India reaps the benefits of structural reforms.”
The Nifty50 accounts for 13 sectors representing about 66.8% of the free float market capitalisation of the stocks listed on the NSE. Among the companies included in the Nifty50 are HDFC Bank, Tata Consultancy Services, Housing development Finance Corp, Reliance Industries and Hindustan Unilever.
The index has performed well in recent years, up nearly 19% over the past year and nearly 15% annualised return over five years as of the end of May in Australian dollar terms.
Reliance Nippon’s executive director and chief executive officer, Sundeep Sikka, said his company was delighted to be offering Australian investors the opportunity to participate in “the India growth story”, adding that the Nifty50 Index has been the “torch bearer” of Indian equities for the last 25 years and is considered “the stock of the nation”.
Breaking down investment barriers
India has traditionally been a difficult market to access due to strict foreign investment rules and although there are already a number of unlisted ‘active’ funds that invest in India, ETF Securities’ NDIA is the first vehicle for passive investment available to Australian investors wanting access to India.
Walesby highlighted the recent news on the Indian election as being a further positive for investors in India’s economy as Prime Minister Narendra Modi’s Bharatiya Janata Party was returned to power with an increasing its majority.
“Political stability will allow the benefits of recent reforms to Goods and Services Tax and bankruptcy laws to continue filtering through in the form of stronger earnings performances by India’s major companies,” he added.
“India’s population of 1.3 billion, and, in particular, its emerging middle class, illustrates the scale of the opportunity,” he continued.
“Within six years it’s expected that around one fifth of the world’s working age population will be Indian, and that represents a huge fillip to the economy.”
He added that the trend of increasing wages of the middle and lower classes, coupled with growing demand for consumer items such as mobile phones, should underpin further strong growth going forward. Notably, 60% of India’s GDP is driven by domestic private consumption compared with 40% in China, effectively insulating the economy against external shocks.
ETF Securities is Australia’s only independent ETF provider and has more than A$1 billion in funds under management, across sectors as diverse as robotics, biotechnology, infrastructure, and commodities.
Reliance Nippon Life Asset Management Limited (RNAM) is one of the largest asset managers in India, managing (directly and indirectly) assets across mutual funds, pension funds, managed accounts, alternative investments, and offshore funds.