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Van Eck launches Market Vectors India Small-Cap Index ETF


New York-based asset manager Van Eck Global has launched the Market Vectors India Small-Cap Index ETF, an open-end exchange-traded fund which provides investors with exposure to small-cap stocks in India.

The fund will seek to track the Market Vectors India Small-Cap Index, which had a base of 122 constituents and an average market capitalization of USD456m, as of 31 July 2010.

"We are very excited to add SCIF to our growing lineup of emerging market small-cap ETFs," says Jan van Eck, principal at Van Eck Global. "It continues to be our strong belief that small-cap stocks are an excellent way to gain direct exposure to a country’s domestic economy. India, in particular, has exhibited demographic and economic factors that support strong continued domestic growth for years to come."

Since undertaking economic liberalisation policies in 1991, India has achieved significant economic growth. The country’s gross domestic product has remained strong in recent years, with real GDP growth registering 7.3 per cent in 2008 and 5.6 per cent in 2009, two years in which most Asian economies contracted.

Indian small-cap stocks are supported by one of the world’s largest and fastest-growing domestic consumer markets, with a demographic profile that is skewed toward the young. India’s rapidly growing middle class is projected to triple in size over the next 15 years, making it twice the size of the entire US population.

The ETF seeks to replicate as closely as possible, before fees and expenses, the price and yield performance of the Market Vectors India Small-Cap Index, which uses a float-adjusted modified market capitalisation-weighting methodology. The top three industry weightings in the index as of 31 July were industrials (27 per cent), financials (20 per cent) and materials (14 per cent).

The fund’s net expense ratio is 0.85 per cent and its gross expense ratio is 0.91 per cent.

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