India ETF Requirements & Chart Example

 


What is an India ETF?

An India ETF is an exchange traded fund which consists of publicly traded companies in India.  Much like the Sensex, Indian ETFs are composed of Indian companies which represent the broad economy of India.  The Bombay Stock Exchange has experienced a significant bull market from '04 through '07, while the US market has been in flat to bear market.  So, with investors looking to put their money to work, an India ETF is a viable option.

India Earnings Fund

The India Earnings Fund was the first ETF released for Indian based companies.  The fund was officially launched in February, 2008 by Wisdom Tree Trust in response to the global demand of investors for the Indian markets.  The Indian Earnings Fund is traded on the NYSE under the ticker EPI.  There are over 150 companies that make up the fund. 

Requirements for Companies listed on the India Earnings Fund

Below are the list of requirements for companies listed on the India Earnings Fund:

  1. Generated 5 million in earnings in the previous year
  2. 200 million in market capitalization
  3. have an average daily dollar volume of $200,000 for the previous year
  4. have traded a minimum of 250,000 shares per month for the previous six months
  5. must maintain a P/E ratio of 2

Chart of the India Earnings Fund

Below is a chart of the India earnings fund from March '08 through Oct '08.  Notice how the EPI is down close to 40%, due to fears of high inflation in India and the global credit crisis.  However, as more investors begin to trade globally, the number of Indian ETFs will only increase.

India ETF