PowerShares Capital Management last month announced the first exchange-traded fund (ETF) to provide direct exposure to a diversified portfolio of Indian securities. The PowerShares India Portfolio, with symbol PIN, was set to begin trading in late February on NYSE Arca, an online securities exchange owned by NYSE Euronext.
“The index on which PIN is based is designed to be the proxy for investable assets into the Indian market,” says Bruce Bond, president and CEO of PowerShares, which is part of Atlanta-based Invesco. The index, compiled by Indus Advisors, is rebalanced quarterly and comprises 50 components from a universe of India-based companies listed on the National and Bombay stock exchanges.
“Because India imposes certain restrictions on foreign holdings, any investable India index must explicitly address these limits,” says Ranga Nathan, managing director of Indus Advisors. The Indus index does this using a proprietary measure of capitalization of foreign investment.
While other ETFs provide indirect exposure to Indian securities, PIN will provide direct and diversified exposure to a broad portfolio of Indian equities. The fund operates through a subsidiary in Mauritius, which has a tax treaty with India.