ETF Watch: First Trust Plans Stand-alone India Fund

Methodology targets companies with strong corporate governance and quality characteristics.

ETF.com
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Reviewed by: etf.com Staff
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Edited by: etf.com Staff

First Trust has filed for an India ETF that is not a part of any wider family within the firm’s wide-ranging roster of ETFs. The First Trust ZyFin India Quality and Governance ETF will track an index that includes 40 components selected based on quality and governance characteristics.

The index is calculated by ZyFin Research Private Limited. Eligible components must be listed on an Indian exchange or domiciled there, or have at least 50% of their revenues or assets generated in or based in India.

Companies are evaluated for quality based on volatility of earnings, leverage and return on equity, the prospectus said, with the 50 highest-scoring stocks then ranked based on their “velocity” (or how much they trade relative to their free-float market capitalization). The five highest-velocity firms are screened out of the index and the remaining companies are scored based on 10 corporate governance standards to arrive at the 40 final components.

India is currently attracting interest from investors, but corporate governance is a concern for some when considering emerging markets. The proposed fund could provide access to India’s market via stable, well-run companies.

The filing did not include a ticker or expense ratio, but it did note that the fund will list on the NYSE Arca.

Contact Heather Bell at [email protected].

 

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