iShares MSCI India ETF (INDA-US)

(A Top Pick August 9, 2017. Up 6%). He stepped away from emerging markets earlier this year but India still offers a good multi-year story. India adopted a biometric identity card system that puts everyone into the standard economy and away from the shadow economy. Deposits at banks are way up because of this. There are many other healthy signs in the economy. BUT, if emerging markets suffer, India will suffer. Because he doesn’t have to be in EM, he’s out of this for now.

(A Top Pick Sept 20/16. Up 12%) India is exactly opposite of any Western country. A very young workforce, very low consumer debt, a functioning banking system and a very orthodox monetary policy.

India is a 6%-7% GDP grower with a long runway. On infrastructure, they have major plans in place. It recently had a hiccup when they brought in the demonetization in 2016. Basically, everybody now has to have a metric identification card. It pulled all the money out of the banking and cash market, and into the banking system. Since 2014, they’ve had $10 billion in bank deposits, which has legitimized a significant portion of the economy, and kind of got it on track. Now they are putting GST in place. Everything is chugging along to upscale this economy.

He doesn’t invest in emerging markets, but his view is that India is certainly a country that is growing at a much higher clip than the rest of the developed world. The one risk is that it is more volatile. If you have a very long-term view, 15-20 years, this is a great thing to own.

India is a growth market, so India and China fall into the same category. India has 300 million middle class people, which is a pretty staggering number. Longer-term, this is probably not a bad place to be.

He is not excited about India, nor is he excited about China. The story right now is probably North America. He does like Europe and would put that in behind the US, and then he would look into places like India.

(Top Pick Sep 20/16, Down 6.55%) There was an announcement with regard to demonetization. About 80% of daily transactions are in Cash in India and they wanted to get rid of that because of tax dodging. It is part of structural reform. We have seen an initial selloff, but it will be like a coiled spring. He sees a more sustainable rally and likes India long term. Nothing has changed structurally in terms of the Indian economy.

India is a story that is a little more popular. Everybody can recite the positives such as young demographics, the government led by Modi or the monetary policies. The real thing you want to see in emerging markets is the “triple merit scenario”; falling interest rates, rising currencies and a rising stock market. The way to do that is to get inflation down, and inflation has been a huge problem in emerging markets for a while. India has stuck to the program.

India? The Indian central banker has just resigned. He was a great central banker and has done a lot of good things for the country. However, he doesn’t think this resignation will impede the plans of the Mohdi government. It would be hard to find a better emerging market than India. Everything you see in the West, such as aging demographics, high debt levels or low interest rates, there is the exact opposite in India. This is the ETF that he uses to plays this theme. This is especially a good, long term holding.

An Indian ETF for the long-term? He is looking at ETF’s that have a lot of liquidity and low costs. This one tracks the index of Indian stocks. It has an MER of .68%. If you want exposure to India, this is probably the easiest way. If you just want the large cap players, you might look at the iShares India 50 (INDY-Q). The MER is a little higher at .94%, but it is the 50 largest companies in India.