# Investing in India?



## davext (Apr 11, 2010)

I was wondering if anyone has become more interested in investing in India lately with the market there trending lower since October last year.

Some ETF options are:
PIN
INDY
EPI

I think their problems revolve around uncertainty and lack of credibility in some of the companies that are listed, and high inflation.


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## Belguy (May 24, 2010)

Well, I invested in the iShares India Nifty Fifty ETF last October.

Bad timing but it is a long term hold and so not to worry.

India is a growth story but all emerging markets countries have their own set of issues which can lead to more volatility than you might get in the developed countries. 

Ten percent of your overall portfolio in emerging markets seems reasonable although VWO might be the best way to go.

A general rule of thumb is to employ the lowest fee, broadest based ETF in each category and Vanguard is always a good starting point in considering the best investment.


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## CanadianCapitalist (Mar 31, 2009)

davext said:


> I was wondering if anyone has become more interested in investing in India lately with the market there trending lower since October last year.
> 
> Some ETF options are:
> PIN
> ...


Closed-end funds IIF and IFA have been around for years. I think a broad market fund such as VWO is best to capture emerging markets exposure. Single Emerging Markets, whether India or some other country are very risky for individual investors.


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## Sherlock (Apr 18, 2010)

If you buy a fund like PIN from a company like Power Shares, do you have to buy it in a USD account since it's American?


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## davext (Apr 11, 2010)

I understand that investing in one country like India may be riskier, but sometimes I wonder how much diversification is really needed.

If I was in India, and I asked a similar question but this time the TSX was down significantly, should I buy an ETF for the TSX? Would the recommendation be, no you should buy an ETF that covers US and Canada? or one that covers all the developed countries? US, Canada, Australia, UK, Germany, France, etc. etc. 

Thanks!


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## kcowan (Jul 1, 2010)

davext said:


> I understand that investing in one country like India may be riskier, but sometimes I wonder how much diversification is really needed...


If you want to follow the courage of your convictions, then investing in a single country is fine. If you are right, you will do better than someone with a balanced portfolio. But the advice here about being diversified is about reducing the risk of loss.


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## CanadianCapitalist (Mar 31, 2009)

davext said:


> I understand that investing in one country like India may be riskier, but sometimes I wonder how much diversification is really needed.
> 
> If I was in India, and I asked a similar question but this time the TSX was down significantly, should I buy an ETF for the TSX? Would the recommendation be, no you should buy an ETF that covers US and Canada? or one that covers all the developed countries? US, Canada, Australia, UK, Germany, France, etc. etc.
> 
> Thanks!


The question you should ask yourself is whether you have an edge in the Indian market (or any other market or stock) that gives you a better insight than other investors. Yes, Indian markets are down. But they may be down for a very good reason. What special insight do you have that makes you believe Indian markets would outperform its emerging market counterparts?


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## HaroldCrump (Jun 10, 2009)

CC is right - placing a bet on a single emerging market vis-a-vis an emerging market index is risky, unless you have true conviction and have undertaken a deep study of that country's economy, politics, social direction, etc.

I admit I haven't (in the case of India), but I see several glaring issues straight away - rampant inflation, recent string of corruption and political scandals, constant conflict with neighbors, esp. mighty China, highly seasonal swings depending on weather and other natural disasters like cyclones and floods and so on.


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## dogleg (Feb 5, 2010)

Risk is a personal decision and whether you buy a 'fund' or a specific stock is a choice one needs to make based on DD and potential reward. Take East Asia Minerals EAS for example with a one year gain of 1000% and a five year gain of 640% or Pacific Rubiales Energy PRE with a five year gain of 4500% and one year of about 300%. Look at POE or JIN and determine what risk you think there is . People who become wealthy in the market don't generally do it buying 'funds' do they ? Anyway to each his own.


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## davext (Apr 11, 2010)

My conviction probably isn't where it should be but I'm looking for blood on the street because I don't see enough opportunity in the North American markets. 

Thanks for the feedback.


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## Belguy (May 24, 2010)

Blood in the streets? Well then, take a look at EGYP!!!


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## Soils4Peace (Mar 14, 2010)

India would in a way be less risky than an emerging index. If you hold diverse Canadian stocks you already have exposure to China and resources (as does Russia). I would expect that India correlates less with Canadian stocks.


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## Brian Weatherdon CFP (Jan 18, 2011)

As an Indian fund I like Excel which I hold personally. For all the reasons mentioned above I don't wish to own the whole market, but rather ~ 30 strategic holdings selected by a unique team. Sure you'll mention the fund still follows the market (ugh!) yet I'm confident of owning some awesome value there over the next 5-10 years. --- As an advisor I add caution because client circumstances and tolerance can change; even for myself my India investment is under 3% of assets. Thus it fits a wider strategy of portfolio allocation.
B


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## Belguy (May 24, 2010)

What is the management fee of the Excel India Fund compared to say the iShares Nifty Fifty India ETF and what is the long term effect of those fees on an investor's portfolio?

Just asking!!

I still say that VWO is a better low fee, broad-based alternative for the average investor.

Any argument?


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## plen (Nov 18, 2010)

Belguy said:


> What is the management fee of the Excel India Fund compared to say the iShares Nifty Fifty India ETF and what is the long term effect of those fees on an investor's portfolio?
> 
> Just asking!!


2.96% to 0.89%


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## PMREdmonton (Apr 6, 2009)

Belguy said:


> What is the management fee of the Excel India Fund compared to say the iShares Nifty Fifty India ETF and what is the long term effect of those fees on an investor's portfolio?
> 
> Just asking!!
> 
> ...


My problem with BRIC is that:

Brazil is too similar to Canada which I already have plenty of exposure to.

I don't trust anything to do with Russia. Plus, they are mostly a commodities country, too.

I also really don't trust China and they are too dependent on the American and European economy for their export economy.

India should be seeing long-term growth and has a domestically focused economy so it should be more insulated from struggles in the developing world.

I also put all my emerging market money in India through XID but I invest only 5-10% of my funds in emerging markets.


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## Belguy (May 24, 2010)

Heard Kevin Oleary say on BNN today that he can't get enough of Brazil.

I love the Brazil market very much, he claimed.

My Latin American holding is ILF.


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## Brian Weatherdon CFP (Jan 18, 2011)

plen said:


> 2.96% to 0.89%


Yes you're right on the MER comparison....and if you like Dynamic Far East Value it's higher too (for sake of discussion). However I specifically don't want those indices. I want a CA/CFA team working for me who can sort the chaff and evaluate who are the most likely companies to still be in business & thriving 3, 5, 10 years hence.
Cheers!
B


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## warp (Sep 4, 2010)

I dont own it, but I have heard about, (and am thinking about) :

IFN........( The India FUND)

Its run by Blackstone......sells in New York
its an actively managed closed end fund.
The mer is 1.25% according to Morningstar..

here are the holdings etc from dec 31. 2010, from their website,
www.blackstone.com


As of December 31, 2010, the Fund’s top ten holdings and sector allocations were: 


Top Ten Equity Holdings % of Net Assets 
Infosys Technologies, Ltd. 8.8 % 
Reliance Industries, Ltd. 7.9 % 
ICICI Bank, Ltd. 5.9 % 
Tata Motors, Ltd. 4.5 % 
Tata Consultancy Services, Ltd. 3.5 % 
Housing Development Finance Corp., Ltd. 3.5 % 
HDFC Bank, Ltd. 3.2 % 
ITC, Ltd. 3.2 % 
GAIL India, Ltd. 2.7 % 
State Bank of India 2.3 % 

Top Ten Sector Allocations % of Net Assets 
Finance 26.8 % 
Computer Software & Programming 15.0 % 
Petroleum Related 13.7 % 
Vehicles & Transportation 12.3 % 
Industrial 12.1 % 
Pharmaceuticals 7.2 % 
Electronics & Electrical Equipment 4.0 % 
Consumer Non-Durables 3.9 % 
Telecommunications 2.9 % 
Metal & Mining 2.3 % 

The long term track record seems ok..its selling at a small discount right now...prob sold at a premium for years.
I would Only buy when any closed end fund sells at a discount.

A quick chart comparison shows that VWo has done much better since 2005.

Any thoughts analysis etc on IFN??


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## I'm Howard (Oct 13, 2010)

I bought XID but only a small amount, most of my foreign money in emerging markets is with Vanguard.

I can't be the only one who remembers them being labelled Submerging Markets.


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## plen (Nov 18, 2010)

Brian Weatherdon CFP said:


> Yes you're right on the MER comparison....and if you like Dynamic Far East Value it's higher too (for sake of discussion). However I specifically don't want those indices. I want a CA/CFA team working for me who can sort the chaff and evaluate who are the most likely companies to still be in business & thriving 3, 5, 10 years hence.
> Cheers!
> B


Are you sure those CA/CFAs who sort out the chafe and evaluate are doing better when all is said and done? Yeah I know about past performance, but those high MERs compound greatly.


```
Fund/Index          |   3y   |   5y    |  10y
------------------------------------------------
Dynamic Far East    |  8.83% |   6.45% |  5.27%
Excel India         |  2.85% |   4.20% | 10.26%
S&P CNX Nifty India |  0.86% |  12.30% | 14.09%
```


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## Brian Weatherdon CFP (Jan 18, 2011)

Thanks PLEN. Yes I believe your #s are correct. 

Comparing to the funds' underlying indices (ie. not the Cda 60) these funds have done well despite their fees. How many indices are negative over the past 10 years, eh? Creating a positive IRR in a negative period, or simply reducing the depth of volatility through such negative period; or indeed creating higher IRR during a period of growth, helps identify the fund managements who have got it right.

And then of course we have to listen carefully to what's happening to think whether times are shifting, and to ponder if managers who succeeded in the past are moving with the times (or could get lost in them).

I appreciate your thoughts!
B


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## Brian Weatherdon CFP (Jan 18, 2011)

OOPS sorry Plen I see you had the India 50 there. My mistake.


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## Belguy (May 24, 2010)

Forget India!! Now's a good time to get in on the ground floor of the new, democratic Egypt (EGYP).


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