VanEck launches ‘Digital India’ thematic ETF

Feb 22nd, 2022 | By | Category: Equities

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VanEck has launched a new thematic equity ETF in the US providing exposure to Indian companies supporting digitization within the South East Asian powerhouse.

William Sokol, Director of Product Management at VanEck

William Sokol, Director of Product Management at VanEck.

The VanEck Digital India ETF (DGIN US) has been listed on NYSE Arca with an expense ratio of 0.75%.

VanEck notes that India has one of the youngest populations amongst its emerging market peers, a rapidly expanding middle class, and a regulatory background that is stable and conducive to growth and innovation.

Additionally, out of 1.4 billion people, 622 million are already active internet users with that number potentially rising to 900m by 2025.

These changing demographics are expected to bring new consumption behaviour and alternatives to traditional spending, banking, and shopping.

William Sokol, Director of Product Management at VanEck, said: “Digitization is taking place across all sectors of the Indian economy, within core digital sectors like IT services, telecom, and software/hardware, as well as emerging themes and sectors like e-commerce, online brokerages, and internet applications. DGIN offers targeted exposure to these trends, and we’re pleased to be bringing this fund to market.”

Angus Shillington, Deputy Portfolio Manager, Emerging Markets Equity Strategy at VanEck, added: “India is in the midst of a massive shift, driven in large part by the rapid digitization of the country’s economy. India’s population includes the largest ‘Gen Z’ of any country and a rising middle class. Due to these demographics, along with low data costs, increasing smartphone penetration, and government policies designed to transform India into a digitally empowered society, the digitization of India is a key theme for investors looking for emerging growth opportunities.”

Methodology

The ETF is linked to the MVIS Digital India Index which begins with an initial universe of companies that are domiciled, headquartered, or incorporated in India and that have market capitalizations greater than $150 million and average daily trading volumes above $1m.

The index includes the ten companies with the highest annual revenue derived from the telecommunication services sector as well as any firm deriving more than 50% of its total revenue from the following industries: software, hardware, information technology services and consulting, communications equipment and infrastructure, telecommunications infrastructure, telecommunication services, internet applications, e-commerce, online financial services, and electronic payment processing.

Constituents are weighted by float-adjusted market capitalization while capping any single stock at 8%. The index is reviewed on a quarterly basis.

As of 21 February, the index contained 35 constituents with nearly two-thirds (62.7%) of the total weight in information technology stocks while the next-largest sector exposures were communication services (18.2%), energy (8.7%), and consumer discretionary (5.4%).

Notable positions included Reliance Industries (8.7%), Infosys (8.4%), Tata Consultancy (8.1%), Bharti Airtel (7.2%), HCL Technologies (6.6%), Wipro (5.0%), and Tech Mahindra (5.0%).

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