Parchayi.com - Personal Finance SimplifiedThe India Funds, INP and what should one do?
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Before INP (Barclays India Exchange Traded Note) showed up, the only options other than regular mutual funds were the CEF’s - IFN (India Fund Inc.) and IIF (Morgan Stanley India Investment Fund). Both IIF and IFN were easily beating the Indian Market (BSE and NSE). Then came INP - An Exchange Traded Note. I won’t go into details but INP tracks the top 68 stocks in the NSE including dividends. No dividends are actually paid to the stockholders, they are just automatically reinvested into the share price of INP. Both the India funds IIF and IFN used to trade at significant premiums and both now trade at discounts of about 13%! (as of Friday). Over the last year, while the Indian Stock Market has reached and stayed around all time highs (albeit with some volatility), IIF and IFN have not moved significantly with their discount steepening. So what should one do to invest in India? For now, I would recommend INP but there are some golden opportunities with IFN too. Over the last few years when IFN was trading at a premium, I used to buy some more using their annual rights offer at 5% disount to NAV (which normally was a 20% discount to the trading price). Now that IFN is trading at a discount and it might continue to do so, one can make use of their semi-annual repurchase offer to make some money. Buy at 13% discount, sell at 2% discount. This scheme however may not work as well as you would hope because the discount is likely to narrow before the offer. That said, over the long term you probably won’t go wrong with any of the India investments. But hey, as usual don’t just take my word for it, do your own research before investing. |
A few days ago, I opened a position in INP (Barclays Bank Zero Cpn ETN(ITR) - see my 
A breakdown of our portfolio (including all stocks and mutual funds) shows 98% investment in stocks, 2% in bonds (via some mutual fund). Of the stocks 61% are US and 39% International. Of the International Stock 60% is in Emerging Markets and 40% in Developed Markets. Currently my target for our portfolio is 50/50 US/International and 60/40 Emerging/Developed so we are off the target portfolio as far as US/International goes, but my international part is exactly on target, by co-incidence more than design. About 28% of our portfolio is in individual stocks and the rest is in mutual funds/etfs. 
