Best ETFs To Invest In India For Q4 2022 – List Of Top 5 ETFs

Nitish Vaibhav

2 years ago

ETFs, or exchange-traded funds, have long been popular among beginner & experienced investors alike for a good reason. Being a basket of securities, ETFs allow investors to experience a diversified stock market environment via a single financial channel. Simply put, ETFs do not rely on one point of performance like stocks; instead, they spread out the investments to tens or hundreds of assets to mitigate risks and help the users benefit from the overall market performance.

In this article, we have specifically assembled a list of 2022’s best ETFs to invest in India for Indian investors. While Indian residents can invest in all international ETFs, they can also capitalize on specialized India-based ETFs that mirror the performance of a basket of equities trading on the National Stock Exchange of India Ltd. (NSE).

Table of Contents

List of 5 best ETFs to invest in India

1. Columbia India Consumer ETF (INCO)

Expense ratio: 0.75%

Columbia India Consumer ETF is considered one of the best ETFs in India thanks to its high inclination toward consumer defensive holdings. INCO tracks the price and yield performance of the Indxx India Consumer Index. This Index is a free-float adjusted market capitalization-weighted product fashioned to measure the performance of 30 companies belonging to the consumer industry in India. The fund invests almost 80% of its net assets in companies included in the said Index, where the investment percentage can substantially reach up to 95%.

As per the latest data showing INCO’s sector weightings, above 72% of fund weight goes to the consumer defensive section, while approximately 27% goes to consumer cyclical companies. The top 5 holdings of INCO with their respective asset percentages are:

Titan Co Ltd (7.91%)
Britannia Industries Ltd (7.82%)
Dabur India Ltd Shs Dematerialised (7.49%)
Godrej Consumer Products Ltd Shs Dematerialised (7.46%)
Hindustan Unilever Ltd (7.40%)

The fund integrates net assets of nearly $80 million with 1,550,000 shares outstanding. Its trailing 3-year daily total return stands at 10.8%.

2. First Trust India NIFTY 50 Equal Weight ETF (NFTY)

Expense ratio: 0.80%

First Trust India NIFTY 50 Equal Weight is another best ETF in India that mirrors the performance of the NIFTY 50 Equal Weight Index. The Index includes 50 of the largest and most liquid Indian companies listed on the National Stock Exchange of India. Moreover, the integrated stocks primarily belong to the value and growth categories. Note that the fund invests at least 90% of its net assets in the aforementioned Index.

NFTY’s portfolio contains securities related to multiple industries, including basic material, consumer defensive & cyclical, energy, technology, and several others, where the financial services sector holds the largest weightage. According to the most recent data, the following five holdings register the highest asset ratios in NFTY:

Bajaj FinServ Ltd (2.57%)
Tech Mahindra Ltd (2.49%)
Hindalco Industries Ltd (2.33%)
Tata Steel Ltd (2.33%)
Bajaj Finance Ltd (2.32%)

The fund has around $46 million in assets under management and one million shares outstanding. Its 3-year daily total return is almost 12%.

3. Invesco S&P 500 Low Volatility ETF (SPLV)

Expense ratio: 0.25%

Invesco S&P 500 Low Volatility ETF is one the best ETFs to invest in India right now due to its defensive and low volatility approach compared to the standard S&P 500 Index. SPLV tracks the investment results of the S&P 500 Low Volatility Index and invests at least 90% of its assets in securities that are part of this particular Index. This Index is designed to evaluate the performance of the 100 least volatile stocks of the standard S&P 500 Index over the previous 12 months as specified by the index provider.

SPLV is a good, diversified fund with holdings in several sectors. Utilities record the highest weightage in the fund’s portfolio, followed by consumer defensive, healthcare, financial services, and industrials. As of 5 October 2022, the fund’s top 5 stock holdings are as follows:

Johnson & Johnson JNJ (1.36%)
Gilead Sciences, Inc. GILD (1.29%)
PepsiCo Inc PEP (1.25%)
Bristol-Myers Squibb Co. BMY (1.21%)
Berkshire Hathaway Inc Class B BRK.B (1.20%)

Invesco S&P 500 Low Volatility ETF has around $9.77 billion in assets under management and 167 million shares outstanding. Its 3-year trailing monthly total return stands at 3.5%, while its 5-year return is almost 9%.

4. Consumer Staples Select Sector SPDR ETF (XLP)

Expense ratio: 0.10%

Consumer Staples Select Sector SPDR ETF stands as one of the best ETFs to invest in India amid the prevailing turbulent stock market climate. XLP is a consumer-defensive focused ETF that corresponds to the performance of the Consumer Staples Select Sector Index. This non-diversified Index accommodates publicly traded companies marked as “consumer staples corporations” by the GICS.

XLP’s portfolio records a consumer defensive sector weightage of 98.7%, followed by healthcare’s 1.29%. As per the latest data, the top 5 XLP holdings, according to their asset percentages, are:

Procter & Gamble Co. PG (14.48%)
PepsiCo Inc PEP (10.75%)
Coca-Cola Co KO (10.27%)
Costco Wholesale Corp COST (9.98%)
Walmart Inc WMT (4.69%)

The fund integrates net assets worth approximately $14.7 billion and 128 million outstanding shares. Its 3-year daily total return is above 5%, while the 5-year trailing monthly return is over 7%.

5. Vanguard International Dividend Appreciation ETF (VIGI)

Expense ratio: 0.15%

Vanguard International Dividend Appreciation is a foreign large blend category ETF that mirrors the performance of the S&P Global Ex-U.S. Dividend Growers Index. The Index measures the investment results of non-US corporations that have consistently increased their dividends over time. It is one of the best ETFs to invest in India if you want to gain exposure to emerging and developed dividend-paying companies from multiple world regions except for the US.

VIGI is a well-diversified fund integrating stocks from various sectors, such as healthcare, industrials, technology, communication services, consumer discretionary, and defensive, among many others. Out of the total 315 stocks, here are its five current top holdings with the highest assets weightage: