The Indian government recently projected that the country’s economy will grow at a rate of 8.6% this year. That’s up from the 8.0% growth rate the country recorded last year.

That would be the country’s fastest growth rate since 2008. The government expects the fastest growth to come in India’s service sector (11%), followed by manufacturing (8.8%) and agriculture (5.4%).

Exchange traded funds make foreign investing simple

Despite its breathtaking growth, India remains a difficult place to invest in directly. That’s because if you buy shares of foreign companies directly (including Indian stocks), you’ll have to worry about currency exchange rates, foreign stock exchange rules and foreign languages. As well, price information is not readily available, and transaction costs are high.

That’s why we think you’re far better off investing in India and many other overseas markets through international exchange-traded funds (ETFs). High-quality international ETFs let you make international investments with greater safety, and without the complications of directly investing in a foreign stock market.

(In a recent issue of our Canadian Wealth Advisor newsletter, we updated our buy/sell/hold advice on iShares S&P India Nifty 50 Index Fund (symbol INDY on Nasdaq), an exchange traded fund that tracks some of the largest, most liquid Indian stocks. See below for further details.)

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Exchange-traded funds mirror the performance of a stock-market index or sub-index. They hold a more-or-less fixed selection of securities that are chosen to represent the holdings that go into the calculation of the index or sub-index. We recommend a number of carefully selected ETFs in Canadian Wealth Advisor.

ETFs trade on stock exchanges, just like stocks. Investors can buy them on margin or sell them short. The best ETFs offer well-diversified, tax-efficient portfolios with exceptionally low management fees. They are also very liquid.

This ETF holds some of India’s top stocks

iShares S&P India Nifty 50 Index Fund is an ETF that aims to track the S&P CNX Nifty Index, which represents the 50 largest, most liquid Indian securities on the National Stock Exchange of India.

The fund’s top holdings are Reliance Industries (conglomerate), 9.8%; Infosys Technologies (software), 9.1%; ICICI Bank, 7.2%; Larsen & Toubro Ltd. (conglomerate), 5.8%; Housing Development Finance, 5.2%; ITC Ltd. (conglomerate), 5.1%; HDFC Bank, 4.7%; State Bank of India, 4.1%; Tata Consultancy Services (information technology), 3.2%; and Bharti Airtel (wireless), 2.4%.

The fund’s industry breakdown includes: Banks, 18.9%; Software, 14.2%; Refineries, 10.2%; Engineering, 5.8%; Automobiles, 4.3%; Finance: Housing, 5.2%; Cigarettes, 5.1%; Power, 4.5%; and Steel, 4.5%. The ETF has an expense ratio of 0.89%.

You can get our full analysis of the iShares Nifty 50 Index Fund and a number of other exchange traded funds suitable for international investing in Canadian Wealth Advisor. Click here to learn how you can get one month free when you subscribe today.