3 ETFs To Watch After India Rate Cut

On Wednesday, the Reserve Bank of India unexpectedly cut its benchmark lending rate by 25 basis points for the second time this year. The move was likely made to spur growth and debuted alongside a new budget plan designed to lower the country’s fiscal deficit.

These two moves may set up an accommodating environment for ETFs targeting publicly traded stocks in India to thrive once again. Despite carrying the moniker of an "emerging market nation," India has been a profitable place to invest in recent years.

iShares MSCI India ETF

The iShares MSCI India ETF (INDA) is the largest fund in this space with over $3.1 billion in total assets. INDA tracks 65 large and mid-cap companies domiciled in India and charges an expense ratio of 0.68 percent. This ETF, trading on the BATS exchange, has gained 37 percent over the last 52-weeks and is already up more than 11 percent so far in 2015.

That relative momentum is impressive when you consider that the broad-based iShares MSCI Emerging Markets Indx (ETF) EEM has only gained 1.69 this year. India makes up 7.81 percent of the country allocation in EEM.

Market Vectors India Small Cap Index ETF

Another hot country-specific fund worth noting is the Market Vectors India Small Cap Index ETF SCIF. This ETF tracks 117 small-cap stocks in India and has over $300 million in total assets.

In 2014, SCIF gained 64 percent and is already up more than 10 percent this year as well. Those gains, while extraordinary, also come with enhanced volatility that has made the market price of SCIF swing significantly in both directions.

Related Link: 5BARz Establishes Subsidiary Company In India

WisdomTree Indian Rupee Strategy Fund

Lastly, the WisdomTree Indian Rupee Strategy Fund ICN is an ETF designed to track the price fluctuations of the rupee currency versus the U.S. dollar. The movement of currency prices is often an important data point for foreign investors to consider when allocating to a specific country.

ICN is more than 3 percent higher this year and has been slowly rising despite the central bank rate cuts that have traditionally led to lower currency prices in other developed nations.