Franklin FTSE India UCITS ETF: Why you should hold this ETFHello,
Franklin FTSE India UCITS ETF (the “Fund”) invests in large and mid-capitalisation stocks in India. The Fund is passively managed and seeks to track the performance of the FTSE India 30/18 Capped Index (Net Return) (the “Index”) as closely as possible, regardless of whether the Index level rises or falls. The Index comprises Indian large and mid-cap equities. The securities in which the Fund invests will be primarily listed or traded on recognised markets globally in accordance with the limits set out in the UCITS Regulations.
OUR VIEW ON THE ETF
In 2024, the Nifty 50—India’s benchmark stock index representing the 50 largest companies on the NSE—rallied over 20% between January and September. However, a 12% correction followed as investors locked in profits, with additional pressure from election-related economic uncertainty. Looking ahead to 2025, India's economic outlook remains robust. The recovery in domestic private consumption, coupled with sustained government spending, is expected to accelerate economic momentum. This, in turn, should drive corporate earnings growth, reinforcing India’s position as the fastest-growing major economy.
Despite some concerns about potential U.S. trade tariffs, we see this as a low-risk factor. The strong diplomatic ties between Prime Minister Modi and U.S. President Donald Trump create a favorable backdrop for negotiations. Modi’s recent U.S. visit coincided with Trump's call for reciprocal tariffs on trade partners, including India, which currently enjoys a trade surplus with the U.S. However, both leaders have committed to working toward a trade agreement by autumn 2025, focusing on tariff reductions, market access, and supply chain integration. With political stability, ongoing economic reforms, and a promising trade outlook, India is well-positioned for continued growth in the medium to long term.
The Franklin FTSE India UCITS ETF is heavily weighted in Financials, IT, and Consumer Discretionary—three strong-performing sectors. Despite a -3.29% return as of January 2025, we believe the ETF remains a solid investment for both current holders and potential entrants. The funds benchmark The FTSE India 30/18 Capped Index represents the performance of Indian large and mid-capitalization stocks. The fund is heavily invested in companies that are fairly large with more than 50% invested in companies with a market cap above 25 billion USD. Our recommendation is a hold on the ETF. Given the fund's 22.22% cumulative return over the past three years, we anticipate a positive performance for the remainder of 2025.
