Over the last decade, India has often been overshadowed by China as the premier emerging market investment destination.
Yet now the Chinese economy is decelerating to its slowest pace since 1990, while India has hit the fast lane.
Indian economic output expanded at 7.5% in the fourth quarter of 2014, besting its longtime economic and geopolitical rival.
Here are 5 reasons why India is worth a serious look.
Prime Minister Narendra Modi is winning high marks from global investors for his drive to loosen restrictions on foreign investment, cut through red tape and push forward a pro-business policy agenda.
Meanwhile, Reserve Bank of India Governor Raghuram Rajan seems serious about winning operational independence for the country’s central bank and keeping inflation under control.
Corporate earnings in India are forecast to advance an average 7% in 2015.
That’s higher than the average corporate earnings by country in the MSCI All Country World Index.
While the commodity price bust has hurt raw-material exporters like Brazil, Russia and South Africa, it has been great news for India.
The country imports about 80% of its energy needs.
The Indian stock market can be volatile and therefore not appropriate for investors looking for safe and steady returns.
That said, some Indian ETFs have performed well over the last year.
Popular ETFs such as the iShares MSCI India ETF (INDA), the WisdomTree India Earnings Fund (EPI) and iShares S&P India Nifty 50 Index Fund (INDY) are up in the double digit range (through March 30) over the last year.
The Indian rupee has been far more steady against the dollar compared to other emerging market currencies.
That means a U.S. investor currently faces less currency risk compared to investing in Brazil or Russia, whose currencies have weakened dramatically over the past year.
India has disappointed global investors before, but as 2015 unfolds this emerging economy is on a roll.
The country’s political leaders are committed to cutting through the red tape and protectionist policies that have made India a tough place to do business in the past.
For the moment, India is a star performer.
The investments discussed are held in client accounts as of March 30, 2015. These investments may or may not be currently held in client accounts. The reader should not assume that any investments identified were or will be profitable or that any investment recommendations or investment decisions we make in the future will be profitable.