India's economy is projected to grow between 6.6% and 7.4% in 2026, outpacing most developed markets. The iShares India ETF (NYSEARCA:INDA) offers access to Indian equities through a single ticker.
The ETF holds 165 companies spanning India's equity market, including financial giants like HDFC Bank and Reliance Industries. It has $9.6 billion in assets and a 0.62% expense ratio.
Financials comprise 29% of holdings and consumer discretionary another 12%. The ETF's return comes from capital appreciation of underlying Indian stocks.
However, INDA's 10-year total return of 117% significantly trails the S&P 500's 241% over the same period. The ETF gained just 1.4% over the past year while U.S. markets rose 18%.
Investors choosing INDA accept several tradeoffs. Single-country concentration means no diversification across emerging markets. Recent tariff threats from the U.S. administration highlight this vulnerability. MarketWatch noted that Trump's shift on India "hurts Prime Minister Narendra Modi politically and India economically."
Currency risk cuts both ways. The Indian rupee's movements against the dollar can amplify or diminish returns. The minimal 0.39% dividend yield makes this purely a capital appreciation play.
Income-focused investors should look elsewhere. The negligible yield and irregular dividend payments won't support retirees. Investors with short time horizons face heightened risk.
The iShares India 50 ETF (NYSEARCA:INDY) tracks India's Nifty 50 index with just 50 holdings versus INDA's 165. INDY's expense ratio is 0.65%, marginally higher than INDA's 0.62%.
INDA serves best as a long-term diversification tool for investors with at least a five-year horizon and tolerance for emerging market volatility.