Firm Files to Trade First ETF in India

Asset-management group aims to help Indian investors benefit from high-growth Nasdaq-100 Index

As U.S. investors continue to expand their investments in emerging markets via ETFs and other products, investors in these markets appear eager to do the same in the developed world.

China, of course, has been an aggressive buyer of U.S. Treasuries for some time. But on Wednesday, an Indian asset-management firm moved to offer the first index ETF to investors in that country.

“MOSt Shares N100 will be a unique offering. It aims to provide Indian investors with a global, diversified, rupee-denominated, Indian-market-hours access to high-growth Nasdaq-100 Index companies such as Google, Microsoft,Apple and other leading global companies,” said Nitin Rakesh, CEO of Motilal Oswal (MOS) Asset Management, in a press release about its ETF filing with regulators in India.

According to Motilal Oswal, investing in the MOSt Shares N100 ETF would not impact Indian investors’ overseas investment limits and should be treated at par with all Indian mutual fund investments.

“We plan to launch more such specialized first of their kind world leading products which help investors create a well diversified portfolio from global assets,” added Rakesh.

On Thursday, the Nasdaq-100 Index (IXNDX) was trading up nearly 20, or 1%, to 2,182.

“It is only fitting that the MOSt Shares N100 will be the first ETF listed in India based on a U.S. equity index, as the NASDAQ-100 Index is the basis of nearly 1,700 investment products in more than 37 countries,” said John Jacobs, executive vice president, NASDAQ OM, in a statement.

According to clearing and custodial giant Pershing, the number of people in India with over $1 million in investable assets is around 1.5 million, and that figure has grown by about 50% just since last year.

ETF Performance

The PowerShares QQQ ETF (QQQQ), which is based on the Nasdaq-100 Index, has about $22.4 billion in assets, according to Morningstar. It is up about 17% year to date and grew 55% in 2009.

The PowerShares India ETF (PIN) has some $525 million in assets. It has expanded 11 this year after jumping 80% last year.

The largest emerging-markets ETF, iShares MSCI EM Index (EEF), has ticked up 12% in 2010 after moving up nearly 70% last year.

According to the research group Index Universe, inflows into international-equity ETFs, mainly emerging markets, were about $3.6 billion in November. The Vanguard MSCI Emerging Markets ETF (VWO) gathered $1.73 billion and now has about $42 billion in total assets.

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Savita Iyer-Ahrestani contributed to this report.

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