Thursday, March 13, 2008

India ETF purchased

For long term potential India has a lot going for it. The demographics are very favourable, the economic growth rate is impressive and potentially sustainable and there is considerable room to improve the economy though infrastructure development and deregulation.

Yesterday I finally made the decision to make a long term investment in the India growth story by purchasing some units in the Lyxor India ETF. The other reason for making this investment was to increase the diversification in my equity portfolio.

While the Indian SENSEX stock index was about 22% off its peak in early January, I have no idea whether the index will fall further. Accordingly, this is a relatively small initial purchase which I will consider adding to in the future.


Anonymous said...


Greetings from Singapore!

India ETF is right time to invest. I have bought into iShares MSCI India ETF listed on Singapore Exchange. The Indian stock market can fall further but I think it will recover.

I believe there are two India ETFs listed on HKEX - do check out the volume between the two and buy only the one that has more volume going for it.

Also, do be aware there is an ongoing issue with India ETF due to SEBI (Security Exchange Board of India)'s restriction on ODI (Overseas Derivative Instruments). For details - check:

Are you able to call up Lyxor folks in HKG and check if similar issue exists with their India ETF in HKG - I would be really surprised if it does not. Do let me know.

Hope this helps!

Anonymous said...

Forgot to mention this - between Lyxor and iShares ETF - I like iShares much better. I find it almost impossible to read Lyxor's annual report whereas iShares annual report is much more readable. Also, the fact that iShares products are also listed on US market whereas Lyxor products are not listed in US market, gives me more confidence with iShares series.

traineeinvestor said...


Thanks for the comments. I had not realised that there was a second India ETF listed in HK. There is - an iShares India ETF.

While the volume on the Lyxor product is sufficiently high for my purposes, the iShares product has better liquidity. When I top up my India position, I will pick the iShares ETF over the Lyxor one should the volume difference remain the same.

From what I understand, all funds investing in India have issues with foreign ownership laws and SEBI's ODI restrictions.


Anonymous said...

I don't like iShares India ETF because they are not really ETF. They don't hold the shares - they synthetically replicate performance of India market through derivatives (warrants, participatory notes etc.) - and hence they are affected by SEBI 's restrictions.

In fact that's the reason, in US, iShares doesn't call it's product as ETF - it is called ETN (Exchange Traded Note) which I think is correct description.

Not sure about Lyxor India ETF - I think you should call them and check with them.

Recently two new India ETFs were launched in US - Wisdom Tree India ETF (EPI) and Powershares India ETF (PIN). Not sure about PIN but EPI specifically mentions that it doesn't have SEBI's restrictions because it invests only in those stocks which doesn't breach foreign ownership rules. Check