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EGShares India Small Cap ETF: A Strategic Way To Value Invest In India’s High Growth Economy

Summary The EGShares India Small Cap ETF is another excellent way to access India’s growth, with comparatively lower valuation. The fund’s investment approach is extremely diverse, with the top 10 holdings only accounting for 29% of the fund’s total assets. Economic highlights of investing in India included annual GDP growth projections of 7.5% for next year, as well as a substantial increase in consumer spending and disposable personal income. The Market Vectors Small Cap Index ETF and the EGShares India Small Cap ETF are two best ways for investors to gain exposure to India through an ETF. In a previous article , I mentioned the benefits of the Market Vectors Small Cap Index ETF (NYSEARCA: SCIF ). Small cap ETFS in India have lower valuation, and have consistently demonstrated substantial earnings growth. For these reasons, I have proposed that small cap ETFs are one of the best ways for investors to gain exposure to India’s fast growing economy. Some previously mentioned highlights of investing in India, include the following: Current annual GDP growth of 7%, which is projected to increase to 7.5% during the 2nd quarter of 2016. High growth in consumption, which is relevant for every socioeconomic level. During the next 12 months, consumer spending is projected to increase by 6.2%, while disposable income will increase by 20.2% The EGShares India Small Cap ETF (NYSEARCA: SCIN ) is another excellent option for investors to gain exposure to India’s economic growth, through an ETF that has low valuation and has had high earnings growth. SCIN data by YCharts The fund’s price has dropped sharply this year, which has consequently created low valuation : P/E: 10.76 P/B: 1.01 P/S: 0.51 Top 10 Holdings An observation of the fund’s top 10 holdings provides a favorable outlook, although the top 10 holdings only account for approximately 29% of the fund’s total assets . Growth for these holdings has been substantial, with the exception of NCC Ltd and Suzlon Energy Ltd. This fund offers the comparative advantage of higher company diversification and lower valuation, as the Market Vectors Small Cap Index ETF’s top ten holdings account for 63.3% of the fund, and its P/E ratio is 11.9. However, the EGShares India Small Cap ETF has substantially lower liquidity, with an average trading volume of 10,179 . Conclusion The lesson from observing both funds is clear; small cap companies have displayed substantial growth and have low valuation. A reconciliation in the price of both of these funds is certainly befitting, as the fund’s price has not rationally responded to the growth in earnings. I recommend both funds as an excellent means to gain exposure to India’s economic growth, and do not recommend the iShares MSCI India ETF (BATS: INDA ) due to its higher valuation. Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. (More…) I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Share this article with a colleague

Lipper U.S. Fund Flows: Net Outflows For Money Market Funds During Wild Week Of Trading

Lipper’s fund macro-groups (including both mutual funds and exchange-traded funds [ETFs]) had aggregate net outflows of $7.0 billion for the fund-flows week ended Wednesday, September 2. This activity represented the second consecutive week of overall negative net flows; investors took out $5.5 billion the previous week. Money market funds (-$10.3 billion) posted the largest net outflows among the macro-groups, bettered by municipal bond funds (-$586 million) and taxable bond funds (-$40 million). Equity funds, with net inflows of $3.9 billion, were the only group on the positive side of the ledger for the week. By Patrick Keon In what was a wild week of trading, the Dow Jones Industrial Average (+65.87 points) and the S&P 500 Index (+8.35 points) each managed to register gains of 0.4% for the week. Market activity for the week was bracketed by two days of superior results; the Dow and the S&P posted combined gains of over 4% on both the first and last trading days of the week. That was enough to offset the approximately 3% loss both indices suffered on Tuesday, September 1. Tuesday’s sell-off, which represented the third worst performance of the year for U.S. stocks, was triggered by continued fears about the economic situation in China. Additional poor economic data from China (its manufacturing purchasing managers index fell to a three-year low) again raised concerns that the world’s second largest economy was headed toward an extended slowdown. The U.S. markets rallied on the first and last trading days of the week on a combination of factors: strong U.S. economic data, rising oil prices, and China’s taking steps to calm its volatile market. U.S. second quarter GDP was revised sharply upward (to 3.7% from 2.3%), which gave rise to speculation the Federal Reserve could still impose an initial interest rate hike in September, despite the turmoil in China. Oil prices bounced during the week after an extended downturn left them at six-year lows. News of decreasing oil reserves was the cause for the rally, which saw the U.S. and global oil benchmarks (West Texas Intermediate Crude and Brent Crude) both appreciate more than 20% from their respective recent lows. Despite Tuesday’s activity, China’s moves to stabilize its market did have a positive impact around the globe. The U.S. market was buoyed at the start of the week by news that China planned to put in controls to limit the yuan’s weakening versus the dollar. The markets also closed the week strengthened by additional measures from China, which stated it would tighten trading rules on stock index futures and foreign exchange derivatives in an effort to solidify its market. The net outflows for the week from money market funds (-$10.3 billion) was only the third time during the third quarter the group had suffered losses. The positive flows performance this quarter has reduced the year-to-date net outflows for money market funds to approximately $40 billion. Institutional Treasury money market funds were responsible for the lion’s share of the week’s net outflows; $12.1 billion net left their coffers. For equity funds, ETFs accounted for all the net inflows (+$4.8 billion) for the week, while mutual funds saw net outflows of $865 million. The ETF activity was dominated by SPDR S&P 500 ETF Trust (NYSEARCA: SPY ), which took in over $7.2 billion of net new money. For mutual funds-in a continuation of this year’s trend-nondomestic equity funds (+$746 million) experienced positive net flows, while domestic equity funds (-$1.6 billion) saw money leave. It was a tale of two cities for taxable bond funds: ETFs took in $4.3 billion of net new money, while mutual funds experienced net outflows of $4.4 billion. The outflows were widespread on the mutual funds side, but Lipper’s High Yield Funds (-$714 million) and Loan Participation Funds (-$451 million) classifications were hit the hardest. The biggest contributors to the positive flows for ETFs were SPDR Barclays 1-3 Month T-Bill ETF ( BIL , +$845 million), iShares 1-3 Year Treasury Bond ETF ( SHY , +$698 million), and iShares 7-10 Year Treasury Bond ETF ( IEF , +$573 million). The $545 million of net outflows for municipal bond mutual funds marked their sixth straight week of outflows. Funds in Lipper’s national municipal bond fund classifications were responsible for $460 million of the outflows. Share this article with a colleague

Falling Prices Are Good, Unless You Are An Imminent Seller

When the stock market is tanking, like it has been recently, I find many people are scared to talk to me about it. They seem to think that declining stock prices are like a death in the family – a reason to offer condolences. But, why is that? I don’t fret if I go to the grocery store and find prices have fallen 20%. When I go to buy gas, I’m quite happy to find prices have fallen. Why is this so different with stock prices? After all, I’m a net buyer of investments. Only if I had some imminent plan to sell my stocks because I needed the money very soon would falling prices be a bad thing. I think most people think I’m putting on a brave face or bucking myself up when I say I’m happy to see stock prices falling. They can’t seem to conceive that falling prices are good for buyers of stocks just as it is good for buyers of groceries, gas, cars or even houses. I think that is because people too closely associate themselves with their current net worth. Instead of conceiving of their net worth as something in flux, that goes up and down like everything in the economy, they feel their current net worth indicates how much they can pull over time. But, current net worth is a snapshot, not life itself. Just as a picture cannot capture a life, neither can current net worth define your lifetime cash flow. Even for those close to or in retirement, stock market fluctuations need not be of major concern. If you have money you need to spend next month or next year in the stock market, you are indeed at risk. But you need not bear that risk unless you choose to. Your cash needs for the next three or so years should be in a stable value position, like a bank or money market account, not in the stock market. Most people who fret over stock market returns don’t need that money soon, either. They know they will need it in time, but they don’t need it today. Market volatility and declines are a benefit to the calm investor who knows that current net worth is just a snapshot. Thought of in this way, stock market drops can lead to higher net worth over time and increased cash flows. That is why I’m happy to see the stock market decline, and I think others should be, too.