We recently saw some well-timed put buying in the second largest India equity based ETF, EPI (WisdomTree India Earnings, Expense Ratio 0.83%, $1.3 billion in AUM), involving the December 20 strikes this week, and the ETF has plunged this morning by more than 4%, trading below $20.
The fund is down more than 10% from its highs reached in mid-October, and is hanging by a thread around its 200 day MA today on speculation that a Trump presidency will crimp outsourced demand for services and manufacturing activities in India, and ultimately bring these types of jobs back to the U.S.
A Bloomberg .com article from this morning titled “Trump’s Rise Deals Another Blow To India’s Manufacturing Dream” states a specific quote from Priyanka Kishore, lead Asia Economist at Oxford Economics in Singapore that is as follows:
“In the medium to long-term, a Trump presidency would add to India’s woes. It would impact India’s engine of growth – the services sector – negatively and also accelerate the nominalization of India’s services and services exports growth, which is an emerging source of concern.”
In spite of the freefall lately in India and other Emerging Markets economies, EPI has not yet seen the brunt of any larger redemptions from what we can see, with just $25 million leaving the fund via redemption flows in the trailing one-month period. However, year-to-date, EPI has seen a more substantial $377 million vacate the fund thanks to position trimming.
On the other hand, the largest India Equity based ETF, INDA (iShares MSCI India, Expense Ratio 0.68%), now has an impressive $3.9 billion in assets under management. INDA has seen net inflows year-to-date in spite of the recent price pressure in the underlying local markets, with more than $329 million entering the fund via creations.
Other larger India sensitive funds to watch here given the recent injection of volatility that will likely not abate anytime soon include INDY (iShares India 50, Expense Ratio 0.94%, $758 million in AUM) and PIN (PowerShares India, Expense Ratio 0.85%, $412 million in AUM). Unfortunately we do not see a “Bear” or “Levered Bear” product in the India space (as is the case with Brazil presently, another Emerging Market economy that is getting punished) for traders or hedgers to utilize in case this weakness in India persists.
Disclaimer: The content of this article is excerpted from a daily newsletter from Street One Financial. While ETF Daily News may edit the contents and add a relevant title to the piece, the author, Paul Weisbruch, does not endorse or recommend any issuer or security mentioned herein.
Paul has been actively involved in the ETF space from both a product and trading standpoint since 2000. Additionally, Paul has well forged relationships with national RIAs, institutional pension fund managers and consultants, mutual fund and hedge fund managers, and also the ETF media. Co-authoring the “S1F ETF Daily” since 2009, the daily piece has become a must for many portfolio managers in the ETF space, with segments regularly appearing in the likes of Barron’s, WSJ, and ETFTrends.com for instance.
He holds his Series 4 (Registered Options Principal), 6, 7, 55 (Equity Trader), 63, and 65 licenses. He graduated from the University of Pittsburgh (B.S. – Economics), graduating magna cum laude, and has an MBA from Villanova University.