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Analysis of India Infrastructure ETF (INXX) shows its Expensive with Worse Performance than Broader Market

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EGShares which is company focussed on launching Emerging Market ETFs has just launched an ETF which is focussed on India’s Infrastructure Sector.The company had earlier launched Infrastructure ETFs for China and Brazil as well.This is the company’s second India specific ETF with a Small Cap India ETF being launched.This Financial Product will be tradable on the New York Stock Exchange.Note the ETFs being traded in the Indian Stock Market lacks in both  depth and variety.This ETF has 30 holdings and is based on the India Infrastructure Index.I could not find the all the 30 holdings but only the top 10 holdings from the EGShare website . A look at the companies,market cap and valuation metrics will show that this ETF is overvalued with a trailing P/E of 20 and P/B of 3.92.Considering the average market cap of the companies is almost $12 Billion,its difficult to see much price appreciation you will see at a P/E of 20.The China Infra ETF on the other hand has a P/E of 16 and Brazil only 13.5.India has a  projected infra spending of $1.5 trillion over th next 10 years but the valuation of the ETF would suggest that the growth is more than  priced in.

Review of INXX

1) Government Holdings a Risk –  3 of the top 10 holdings are Government Companies.While these companies have peformed well inline with the Economy,their profits are always at risk as the Indian Government imposes social mandates on these companies leading to sharp unexpected decline in profits.

2) Some Companies have Corporate Governance Problems – 2 of the top 10 private companies are not exactly paragons of corporate governance.While one is known for Displacing Tribals,the other company does not have the best management quality.

3) Not a Single Cheap Constituent– The other companies are also quite expensive on all valuation metrics.There is not a single cheap stock amongst these companies.Some of the companies took a massive fall in the 2008 crisis and are far below those highs.

4) Expensive Valuation on all Metrics – P/E of  20,P/B  of 4 and P/S of 3 would make you think that you are buying a high growth technology ETF rather than a Infrastructure ETF.While no one doubts that India Infrastructre will grow fast , any geopolitical or Internal problems would lead to an equally sharp fall.India’s problems with Pakistan-China and Internal Naxalite Problems are big Potential Risk.

5) ETF has Worse Performance and Higher volatility than Broader Nifty Index – The ETF Fact Sheet shows that this ETF has underperformed the broader Nifty Index both on returns and volatility over all 3 Time periods of 1 year,2 year and since Sept 2006.


This INXX ETF has  a relatively high gross expense ratio of 1.5% with a net expense ratio of 0.85% for the first couple of years.The valuation of this ETF is quite expensive given that Large Cap Nature of these Stocks.There are also some picks that I would avoid .It would make much more sense to invest in individual high quality infrastructure stocks especially since India has recently liberalized foreign investing in Indian stocks.I would advise someone to rather invest in NiftyBees which is listed on the Indian Stock Market.


Sneha Shah

I am Sneha, the Editor-in-chief for the Blog. We would be glad to receive suggestions, inputs & comments on GWI from you guys to keep it going! You can contact me for consultancy/trade inquires by writing an email to

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