India’s Path to Becoming a Superpower
Prime Minister Narendra Modi envisions India as a developed nation by 2047, celebrating 100 years of independence. While this aspiration may be ambitious, India appears on track to become a global superpower, potentially with an economy comparable in size to the United States. As India navigates its economic challenges and opportunities, its rise may have significant implications for the global landscape.
Economic Growth and Potential
India's economy is projected to grow rapidly, driven by its large and youthful population. By 2050, India’s population is expected to reach 1.67 billion, significantly outpacing China and the U.S. Even if India’s GDP grows at a modest 5% annually, it could match the economic output of the U.S. by 2047 in terms of purchasing power parity (PPP). However, India’s productivity and technological advancement will still likely lag, highlighting the need for targeted economic reforms and investments in innovation.
Opportunities for Growth and the Financial Sector
India is on a promising journey toward becoming a high-income country, with opportunities to significantly elevate its economic standing. While comparisons with Greece, the lowest-income advanced economy by IMF standards, highlight the ambitious goal ahead—India’s GDP per capita in 2023 was about a quarter of Greece’s—there is great potential for rapid progress. By sustaining a growth rate comparable to China’s during its peak years, India can bridge this gap. Key areas of focus, such as advancing infrastructure, enhancing education, ensuring political stability, and effectively managing climate risks, will be instrumental in driving India's continued growth and development. This transformation also presents exciting opportunities for the financial sector, as the need for capital investment, innovative financing solutions, and expanding financial services will be critical drivers of India’s economic success.
India’s Strategic Advantages
India’s geopolitical positioning offers unique advantages. As a key player in the “China plus one” strategy, India’s relationships with Western countries and other global powers position it as an influential connector in international trade and diplomacy. The Indian diaspora, especially in the U.S., provides a valuable bridge, enhancing India’s soft power and economic influence.
The Global Economic Context
While India’s growth prospects are promising, the country faces challenges such as income inequality, infrastructure deficits, and environmental concerns. Addressing these issues will be crucial to sustaining its growth momentum. However, India’s proactive approach to reform and development, including policies to enhance ease of doing business and attract foreign investment, indicates a strategic focus on overcoming these barriers.
How May Investors Gain Exposure to the Indian Financial Sector?
The Range India Financials ETF (INDF) seeks to track the performance of Indian banks, financial institutions, housing finance companies, insurance companies, and other financial services companies as measured by the Nifty Financial Services 25/50 Index.
[1] Unless otherwise noted, all data sourced from: Wolf, Martin. "Why India Will Become a Superpower." Financial Times, 4 Sept. 2024, https://www.ft.com/content/7ebec65b-79fb-4366-8d55-bc817c8606ac.
Carefully consider the Funds’ investment objectives, risk factors, charges and expenses before investing. This and additional information can be found in the Fund’s prospectus, which may be obtained by visiting www.rangeetfs.com/indf, or by calling 1-800-617-0004. Read the prospectus carefully before investing.
Investing involves risk, including the possible loss of principal. International investments may also involve risk from unfavorable fluctuations in currency values, differences in generally accepted accounting principles, and from economic or political instability. Emerging markets involve heightened risks related to the same factors as well as increased volatility and lower trading volume.
The Fund is non-diversified. Its concentration in an industry or sector can increase the impact of, and potential losses associated with, the risks from investing in those industries/sectors.
Investing in India may involve the risk of capital loss from unfavorable fluctuations in currency values, from differences in generally accepted accounting principles, or from economic or political instability in India as well as increased volatility and lower trading volume. Certain restrictions on foreign investment may decrease the liquidity of the Fund’s portfolio, subject the Fund to higher transaction costs, or inhibit the Fund’s ability to track the Index. The Fund’s investments in securities of issuers located or operating in India may be limited or prevented, at times, due to the limits on foreign ownership imposed by the Reserve Bank of India (“RBI”).
The Fund is registered as a foreign portfolio investor (“FPI”) with the Securities and Exchange Board of India (“SEBI”) in order to have the ability to make and dispose of investments in Indian securities. There can be no assurance that the Fund will qualify or continue to qualify as an FPI, or that the Indian regulatory authorities will continue to grant such qualifications and the loss of such qualifications could adversely impact the ability of the Fund to make and dispose of investments in India.
Narrowly focused investments and investments in smaller companies typically exhibit higher volatility. Financial services companies are subject to extensive governmental regulation, which may limit both the amounts and types of loans and other financial commitments they can make, the interest rates and fees they can charge, the scope of their activities, the prices they can charge and the amount of capital they must maintain. There is no guarantee the fund will achieve its stated objective.
A new or smaller fund is subject to the risk that its performance may not represent how the fund is expected to or may perform in the long term. In addition, new funds have limited operating histories for investors to evaluate and new and smaller funds may not attract sufficient assets to achieve investment and trading efficiencies.
Shares are bought and sold at market price (not NAV) and are not individually redeemed from the Fund. Brokerage commissions will reduce returns. The market price returns are based on the official closing price of an ETF share or, if the official closing price isn’t available, the midpoint between the national best bid and national best offer (“NBBO”) as of the time the ETF calculates current NAV per share, and do not represent the returns you would receive if you traded shares at other times. NAVs are calculated using prices as of 4:00 PM Eastern Time.
Exchange Traded Concepts, LLC serves as the investment advisor of the fund. The Fund is distributed by SEI Investments Distribution Co. (SIDCO, 1 Freedom Valley Drive, Oaks, PA 19456), which is not affiliated with Exchange Traded Concepts, LLC, or any of its affiliates.
