Indian Market Investment Opportunity for US Investors - Garrett Beauvais

The fact that The India Fund (IFN) and Morgan Stanley's India Investment Fund (IIF), two closed-end funds focused on India, stopped following the broad Indian market as measured by the India BSE 30 Sensitive Index was painfully clear late last year.

In December 2006, Barclays announced the availability of the iPath MSCI India ETN (INP). INP is not an ETF but an ETN (Exchange Traded Note). ETNs are unsecured debt instruments and carry the credit risk of the issuer, Barclays Bank PLC in this case.

What I was curious to know was if, during the most recent market correction, IFN and IIF had held up any better than the BSE 30 index and, also, if INP had continued to track the index. While three months of history is not much to go by, it is nevertheless a good early indicator that INP continues to track the index well and that IFN and IIF continue to underperform.

For anyone intent on participating in the Indian market, INP seems to be a lower risk alternative to the badly lagging IFN and IIF closed-end funds.