Are there silver ETFs in India?
For these five reasons, I am betting on this India ETF
Our author Erik Clement has been writing for ETF Nachrichten for a long time. He can hardly imagine a day without the stock market. Exchange Traded Funds make up the center of his portfolio. For a slightly more risky addition, our author has also opted for the iShares MSCI India UCITS ETF (ISIN: IE00BZCQB185). In the following article he lists five reasons why he invests in the India ETF every month with a clear conscience.
1. Growth wherever the eye can see
India is on a growth path. This is particularly true in two areas: the economy and the population. Together with China, India is the only world economy that is growing solidly at more than 5% per year. In recent years, India's economy has been one of the largest in the world. The Corona crisis caused a brief slump - Indian GDP is said to have shrunk by up to 10% in the Corona year. In 2021/2022, however, it should go back to growth. Then GDP growth should be more than 5%.
Population growth in India is significantly faster than in the USA, Germany or China. It is only a matter of time when India will overtake China as the most populous country in the world. According to forecasts, India will be home to around 1.6 billion people in 2050. Then it will go back slightly.
2. Step by step towards a free society
Traditionally, the state, economy and religion in India were closely intertwined. The Hindu faith and the caste system of India shaped society for many centuries. Over 80% of Indians are Hindus. The hierarchical caste system makes social advancement difficult. The people in India cannot choose which work they want to do or which people they want to work with - far from any ethics, potential remains untapped.
However, the younger Indians see the caste system more and more loosely. India is slowly becoming a freer society. People can now change caste or work with other castes. With my investment, I assume that India's economy and society will become more and more liberal. With increasing prosperity and widespread education, religion becomes less important. This could have a positive impact on the economy.
3. English speaking society
In times of globalization, language barriers are a burden for companies and investors. Fortunately, this problem is manageable in India. Almost 30% of the population of India can already speak English today. With a view to the German population (approx. 70% can speak English), this proportion seems manageable. However, one should not neglect that Hindi and English are far more different than German and English.
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At the same time, India is still a developing country, despite its rapidly growing economy. For a developing country, however, these numbers are impressive. In China, for example, less than 2% of the population speak English. At the same time, the English language dominates in government, universities and companies.
4. Popular for outsourcing
The combination of the English language and low average wages is almost unique in the world. Nowhere else in the world are there skilled workers who can communicate in English for less than 2 euros an hour. Companies in Central Europe would have to shell out at least 30 euros as an hourly wage for such a skilled worker. As a result, Indian workers and companies are ideally placed to advance IT projects remotely. Outsourcing has become an important industry in India.
Cheap labor and English language are features of the positioning of the Indian economy these days. I am confident that the Indian economy will find more niches - after all, there are more than a billion Indians concerned about wealth generation. Compared to its Asian competitor China, politics is more liberal. The Indians know our European services and offers better. Censorship is less widespread than in the Middle Kingdom. As a result, outsourcing to India is unlikely to lose its importance in the next few years.
5. Perfect for diversification
Anyone who misses the desired growth in the western economies should look to Asia. In addition to China and the Southeast Asian countries, India could have a bright future. However, India is underrepresented in traditional ETFs. With an investment in the Indian stock market, investors far away from Germany and the USA are positioning themselves more broadly.
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Don't forget the risks!
On the other hand, the Indian economy is still struggling with problems. An investment in India is surrounded by risks. As an investor, I have to be aware of this again and again, so that the India ETF only makes up a manageable portion of my portfolio.
Corrupt behavior or nepotism are still the order of the day in India. Society and the economy are becoming more liberal. However, the Indian caste system is still widespread. Though I think it's unlikely, India could take some steps back again in the future. Social and ecological problems round off the risks.
Nevertheless, for me, the opportunities of the iShares MSCI India UCITS ETF outweigh the odds. Diversified, I can invest in around 100 companies from India that could benefit from the country's growth in the future.
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