India
Published by Radif Partners · Updated
MSCI India, FTSE India, the world's fastest-growing major economy
This page compares 6 funds in the India category, with ongoing charges from 0.19% to 0.85% and a median of 0.65%. The gap between the cheapest and the dearest is worth roughly €660 over ten years on €10,000 invested: for a comparable index, that is the most reliable difference between two funds, because it rests on no assumption about markets. 5 of the 6 funds are accumulating and 5 replicate their index by holding its securities, the others using a swap. The largest fund in the list is INDA, which matters less for returns than for the risk of closure: a fund that stays small usually ends up merged. Past performance is not used to rank this list: over the horizons published it says more about the index being tracked than about how the fund is run.
6
0.54%
-13.9%
0.19%
+-12.6%
iShares MSCI India ETF
iShares MSCI India UCITS ETF USD (Acc)
Franklin FTSE India UCITS ETF
Franklin FTSE India UCITS ETF Acc
WisdomTree India Quality UCITS ETF - USD Acc
Xtrackers Nifty 50 Swap UCITS ETF 1C
Strong growth, high valuations and constrained access
India is the emerging market whose economic path is the easiest to read: a young population, expanding domestic consumption, limited dependence on exports. That quality is known, and it is paid for: the Indian market regularly trades at earnings multiples half again above other emerging markets, at times above the American market. Growth already in the price produces no extra return: growth has to exceed what is anticipated, not merely be strong.
Access imposes its own constraint. Direct foreign investment on the Indian exchange is regulated, and local capital gains tax applies to funds, which pushes several products towards synthetic replication or towards a domicile chosen to benefit from a tax treaty. Tracking difference is affected accordingly, in a direction that varies by year and is stated in the annual report. One last check: how much India you already hold through a broad emerging-market fund, where it accounts for a substantial share of the index, often above fifteen per cent.
What the funds in this category show
Where the money actually sits
The category holds 6 funds and 16.0B in combined assets, and those assets are not spread evenly. iShares MSCI India ETF (INDA), run by iShares, holds 5.8B on its own, and the three largest, iShares MSCI India ETF (INDA), iShares MSCI India UCITS ETF USD (Acc) (IIND) and Franklin FTSE India UCITS ETF (FLIN), account for 82.4 % of the total. At the other end, Xtrackers Nifty 50 Swap UCITS ETF 1C (NFTY) manages only 200M. Size is no guarantee of quality, but it decides two very concrete things: the spread between buying and selling price you pay on every order, and the odds that the fund still exists in ten years.
The fee gap, in money
Ongoing charges run from 0.19 % for Franklin FTSE India UCITS ETF (FLIN) to 0.85 % for Xtrackers Nifty 50 Swap UCITS ETF 1C (NFTY), a gap of 0.66 points, against a category average of 0.54 %. On £10,000 held for ten years that gap is roughly 660 in extra charges, before counting the return that money would itself have earned. It is the one variable in the comparison known in advance: past performance does not repeat, fees repeat every year.
Two funds in one category do not hold the same basket
The 6 funds listed track 4 different indices, among them MSCI India, FTSE India 30/18 Capped, WisdomTree India Quality and Nifty 50 Leverage Total Return. The largest tracks MSCI India. That spread is why two funds filed under the same theme can differ by several points over a year: they hold different securities, weight them differently and rebalance on different dates. Each fund page names its index, and that is where a serious comparison starts.
Replication and domicile
5 funds hold the constituents of their index directly, 1 use a swap, including Xtrackers Nifty 50 Swap UCITS ETF 1C (NFTY) from Xtrackers. Synthetic replication often tracks more closely and reaches markets that are hard to hold directly, at the price of a counterparty risk that is regulated but real. Physical replication is easier to understand and allows securities lending, which earns the fund income and adds its own risk.
4 of the 6 funds are domiciled in IE, the rest in US and LU. Domicile sets the withholding tax the fund itself suffers on the dividends it receives, a cost absent from the stated fee but present in the return, and it also sets your own tax treatment depending on where you live.
Accumulate or take the income
5 funds accumulate dividends, 1 pay them out. The largest accumulating share class is iShares MSCI India UCITS ETF USD (Acc) (IIND), the largest distributing one iShares MSCI India ETF (INDA). The choice is not about yield, both versions of the same index return the same before tax, but about tax and discipline: the accumulating class reinvests with no cost and no decision, the distributing class pays income that is taxable in the year it arrives.
Age and critical size
The oldest fund in the category, Xtrackers Nifty 50 Swap UCITS ETF 1C (NFTY), launched on 2007-07-05, giving 19 years of history, and the newest, Franklin FTSE India UCITS ETF Acc (FLXI), on 2019-06-05. A long record shows how the fund behaved in a fall, which no one-year number can. A fund launched two years ago has lived through a single market regime.
None of the 6 funds manages under 100 million, the smallest being Xtrackers Nifty 50 Swap UCITS ETF 1C (NFTY). The category is therefore clear of closure risk for want of size, the risk that forces a sale on the issuer's timetable rather than the holder's.
Frequently asked questions
Why invest in India ETFs?
India is the world's fastest-growing major economy with a young population, expanding middle class, and pro-business reforms. India ETFs provide exposure to this structural growth story. Check the figure in the key information document of the exact share class your broker offers, since two classes of the same fund can differ on charges and on distribution policy.
What are the risks of investing in India?
India investments carry currency risk (INR volatility), regulatory uncertainty, corporate governance concerns, and relatively high valuations compared to other emerging markets. What matters more than the ranking is whether the underlying index suits your horizon and your tolerance for a fall of thirty per cent, which no score can decide for you.
Which India ETFs are available in Europe?
UCITS-compliant options include iShares MSCI India (IIND) and Franklin FTSE India (FLIN). IIND has higher AUM but a 0.65% TER, while FLIN is cheaper at 0.19% TER. Past performance over these horizons says more about the index than about the fund, which is why the comparison here weighs cost, size and tracking quality instead.
How much should I allocate to India?
India represents about 2% of global market cap but 18% of the MSCI EM index. A typical allocation is 2-5% of an equity portfolio for investors seeking EM growth exposure. Over a ten-year horizon the ongoing charge weighs more than any difference in past performance: 0.20% against 0.50% on €10,000 is about €300, compounded.