India is among the largest and fastest-growing economies in the world, thanks in large part to strong domestic consumption and investments. How can advisors position their clients to ride this potentially profitable tide? Providing exposure to India’s growth story while sidestepping valuation pitfalls is key—and that’s just what the VanEck India Growth Leaders ETF (NYSE Arca: GLIN) is designed to do.
In a recent conversation, Wealth Advisor Managing Editor Scott Martin and JP Lee, a Product Manager from VanEck, explored the significant potential of India’s economy and discussed how GLIN can offer US investors a strategic opportunity to capitalize on this growth.
India’s economy has been outperforming not just China but also the broader emerging markets. This growth is a standout feature among emerging-market countries. Indian stocks’ performance has been strong, and GLIN provides a clear entry point into this expanding market. Unlike the broader market indexes, this exchange-traded fund (ETF) focuses on growth at a reasonable price (GARP), selecting companies that show robust growth while maintaining reasonable valuations.
GLIN invests in companies across a variety of sectors, creating a portfolio that consists of about 80 companies, significantly fewer than some other India-focused ETFs, which often include upwards of 100 to 400 names. VanEck’s selective approach allows for a more targeted investment strategy, Lee says, by concentrating on companies that are expected to perform well based on their growth and valuation metrics.
Thematic investing through ETFs such as GLIN provides several advantages. For US investors, accessing the Indian market directly can be challenging because of local brokerage account requirements and other logistical barriers. However, ETFs simplify this process by offering a one-trade solution that provides exposure to foreign markets within a regular brokerage account. This accessibility is particularly beneficial for advisors with clients who have connections to South Asia, Lee notes, allowing them to invest in the local market without moving assets overseas.
He suggests that GLIN can be effectively used as a satellite position in a diversified investment portfolio. Advisors who are underweight in emerging markets can consider adding GLIN to enhance their exposure to India’s growth potential. Although it’s important not to rely solely on India for emerging market exposure, GLIN can complement other emerging-market investments by focusing on India’s unique growth story.
Valuations are a significant concern for many investors looking at emerging markets. GLIN’s GARP approach helps mitigate these concerns by ensuring that the portfolio maintains a price/earnings-to-growth ratio below one. This level indicates that investors are paying a reasonable price for the expected growth, making GLIN a compelling option for those worried about overvalued stocks in the Indian market.
GLIN’s portfolio includes a diverse range of companies from traditional sectors such as telecommunications and banking to those involved in infrastructure development, such as coal companies. This diversity reflects India’s economic landscape, which combines both traditional and modern growth drivers. Investment in infrastructure, especially railways, is significant, but the digital consumer economy is also burgeoning.
India’s government plays a crucial role in driving economic growth through various policy initiatives. Investments in infrastructure and digitalization are creating a dynamic environment where both traditional and modern sectors can thrive. This dual approach not only boosts the economy but also provides multiple avenues for growth within the GLIN portfolio.
In addition to traditional sectors, GLIN also taps into India’s digital economy. This sector is driven by local demand and entrepreneurial energy, with increasing numbers of people gaining access to banking and investment opportunities for the first time. This domestic demand-driven growth story is a critical factor behind India’s economic success and is well represented within the GLIN portfolio.
For advisors, GLIN offers a strategic opportunity to invest in India’s promising economy while managing valuation risks. By incorporating GLIN into a diversified portfolio, advisors can provide clients with exposure to a high-growth market that is often underrepresented in global investment strategies.
The VanEck India Growth Leaders ETF (GLIN) represents a robust investment vehicle for capturing the growth potential of India’s economy. Its GARP approach aims to ensure that advisors are getting value for their clients’ investments while accessing a diverse range of high-growth companies. As India continues to outperform other emerging markets, GLIN stands out as a valuable addition to a well-rounded investment portfolio. Advisors looking to enhance their emerging-market exposure should consider GLIN as a strategic satellite position that complements existing investments and leverages the growth opportunities of one of the world’s fastest-growing economies.
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