Hougan: 10 Great ETFs You Don't Know (Part 1)

April 25, 2014

Forgotten ETF #7: Market Vectors India Small-Cap (SCIF | D-49)
AUM: $182M
ER: 0.91 percent

One of the coolest things we do at ETF.com is our Alpha Think Tank. It’s a subscription newsletter that delivers the insights of 13 leading macroeconomists and political scientists—folks like Nouriel Roubini, Don Luskin, Marc Faber and Ian Bremmer—along with our picks on how to express those views using ETFs. It costs just $299/year. You can learn more about it here.

In a recent issue of Alpha Think Tank, David Kotok of Cumberland Advisors called out India as the best-positioned BRIC. Kotok thinks the potential election of a reform-minded government in India, along with the appointment of Raghuram Rajan as the governor of the central bank, positions the country for growth.

The obvious play there is the iShares MSCI India ETF (INDA | C-97), a broad-based India ETF that stocks up on the big-dog banks and technology firms that dominate India’s market. But an alternate idea is the Market Vectors India Small Cap ETF (SCIF).

SCIF’s portfolio (as you would expect) is loaded with companies you’ve never heard of, with an average market cap of just $547 million compared with $25.5 billion for INDA (which holds very few small-caps).

Small-cap exposure to emerging markets often gives you a tighter link to the growing consumer side of those economies, and that’s the case here: Consumer cyclicals make up 24 percent of SCIF, compared with just 6 percent of INDA.

If the economy in India improves and its middle class grows, those consumer stocks should do quite well. Perhaps that explains why SCIF is up more than 18 percent year-to-date, compared with just 7 percent for INDA.

I honestly didn’t know there was a legitimate small-cap India ETF out there. I’m glad to know there is.



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