SGX Market Updates

India ETFs Grab Spotlight in 2017 Year-to-Date


PUBLISHED ON |

05 May 2017

  • SGX lists four Indian equity ETFs, three of which track the MSCI India Index, while the fourth tracks the Nifty 50 Index. They were among the top performing ETFs in the year-to-date, averaging a return of 16.0%.

  • In the year thus far, Indian equity fund inflows have reached US$6.3 billion, second only to Taiwan in Asia. In terms of global fund flows, India was ranked 11th, above key Asian economies like South Korea, Malaysia and Indonesia, which are also experiencing net inflows in the year-to-date.

  • The iShares MSCI India Index ETF (I98, QK9) is classified as Excluded Investment Products (EIP), and therefore fully accessible to all investors without enhanced safeguards of the Specified Investment Products (SIP) regime.




Four Indian Equity ETFs 

SGX lists four Indian ETFs – db x-trackers MSCI India Index UCITS ETF, Lyxor ETF MSCI India, iShares MSCI India Index ETF and db x-trackers CNX Nifty UCITS ETF. Three track the MSCI India Index, while the fourth tracks the Nifty 50 Index. They were the among the top performing ETFs in the year-to-date, averaging a total return of 16.0%. This brings their one-year and three-year returns to 24.7% and 39.2% respectively. iShares MSCI India Index ETF (I98) is the most active Indian ETF, generating a traded value of S$6 million over the last three trading sessions.

As mentioned in a previous Market Update, Indian stocks are amongst the best performers in emerging market equities since the start of 2017, with inflows from domestic and overseas investors propelling the Sensex Index to its highest in seven years. Investors have been cheered by India’s political stability and positive macroeconomic drivers, while new government regulations issued this week for the banking and property sectors have further buoyed sentiment.



Positive Macroeconomic Drivers

  • Growing confidence in the government’s reform agenda following Prime Minister Modi’s victory in the state elections
  • Goods and Services Tax (GST) bill expected to boost GDP growth by 1% to 2%
  • Net inflows of foreign investments in 2017 YTD compared with net outflows over the last four months of 2016

India’s cabinet has approved plans to amend the country’s banking regulation act that deals with central bank powers to govern lenders. According to media reports, the new rules will empower the Reserve Bank of India to resolve the industry’s high non-performing asset ratios by ordering lenders on ways to cut delinquent debt.

Under laws that came into force earlier this week aimed at cleaning up India’s property sector, developers have to use at least 70% of sale proceeds to complete residential projects, rather than funnel money to other jobs, and will no longer be allowed to start pre-selling apartments before all building approvals are obtained.

In the year-to-date, Indian equity fund inflows have reached USD$6.3 billion, second only to Taiwan in Asia. In terms of global fund flows, India ranked 11th, above key Asian economies like South Korea, Malaysia and Indonesia, which are also experiencing net inflows in the year-to-date.

The four Indian ETFs listed on SGX are tabled below, sorted by YTD total returns.

Name Currency Stock Code Total Return
YTD %
Total return
12M %
3 Year
Total Return
Annualized %
3 Year
Total Return
%
db x-trackers MSCI India Index UCITS ETF USD LG8 16.2 23.8 11.1 37.2
Lyxor ETF MSCI India USD G1N 16.2 23.4 11.1 37.1
iShares MSCI India Index ETF SGD QK9 16.1 24.3 11.5 38.6
USD I98 15.6 24.6 11.5 38.5
db x-trackers CNX Nifty UCITS ETF USD HE0 16.0 27.4 13.0 44.4
Average     16.0 24.7 11.6 39.2

Source: SGX, Bloomberg & SGX StockFacts (data as of 4 May 2017)




Excluded Investment Product (EIP) ETFs

There are currently 24 ETFs which are classified as Excluded Investment Products (EIP), and therefore accessible to investors without enhanced safeguards of the Specified Investment Products (SIP) regime. Easier access to ETFs provide retail investors with a simple yet low-cost way of building a well-diversified investment portfolio.ETFs that are EIPs will be predominantly cash-based, i.e., the ETF funds will buy into the underlying securities to track the benchmark indices.

Of the four India ETFs, only the iShares MSCI India Index ETF (I98, QK9) is classified as EIP.

Investors can filter for the list of EIP ETFs from the SGX ETF Screener (click here).

ETFs are investment funds listed and traded intraday on a stock exchange. The majority aim to track the performance of an index and provide access to a wide variety of markets and asset classes, including local stocks, international securities, bonds, commodities or money markets.

Each ETF gives investors access to the performance of the asset that comprises the underlying index. Investing in the ETF is also less costly if one was to build a similar portfolio by buying the individual stocks. It also provides exposure to international markets and asset classes that may be inaccessible to individual investors.







This article is provided by SGX My Gateway.



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