VanEck has launched the VanEck Digital India ETF (DGIN), a new ETF designed to offer targeted exposure to the leading companies involved in and supporting India’s digitisation.
“India is in the midst of a massive shift, driven in large part by the rapid digitization of the country’s economy,” says Angus Shillington, Deputy Portfolio Manager for VanEck’s active Emerging Markets Equity Strategy. “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 digitisation of India is a key theme for investors looking for emerging growth opportunities.”
Out of India’s population of 1.4 billion people, 622 million are active internet users, with that number potentially rising to 900 million by 2025, bringing new consumption behaviour and alternatives to traditional spending, banking and shopping.
Another major driver of this digital economy is the growing number of “unicorns ” going public in India in recent years, enabled by the rise of a robust internet ecosystem, increased availability of private capital and a favourable regulatory environment. India has had 83 unicorns come to market with a total valuation of USD277.77 billion as of mid-January 2022. Furthermore, the country’s robust IPO pipeline has 250 companies currently valued at over USD100 million, respectively, and 100 additional new unicorns poised to enter the market by 2025.
“Zomato, one of the biggest names to recently come out of India’s IPO pipeline, is an excellent example of how digitisation is creating new opportunities and revolutionizing consumer habits—in this case within food delivery,” says William Sokol, Director of Product Management at VanEck. “Digitisation 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.”
DGIN seeks to track as closely as possible the price and yield of the MVIS Digital India Index (MVDINDTR), a rules-based index offering pure-play exposure to companies involved in supporting the digitization of the Indian economy. Companies eligible for inclusion in the index must be domiciled, headquartered or incorporated in India and have a market cap exceeding USD150 million daily trading value, and be “pure play,” meaning at least 50 per cent of their revenues are derived from one or more of the following categories: software, hardware, information technology services and consulting, communications equipment and infrastructure, telecommunications infrastructure, telecommunication services, internet applications, e-commerce including online financial services and electronic payment processing.
In addition, Indian companies that are ranked within the top 10 telecommunication services companies by annual revenue are also eligible for inclusion in the index.
“DGIN was informed by our active emerging markets Investment Team, and exemplifies the extensive emerging markets experience we bring to our active and passive strategies,” says Ed Lopez, Head of Product Management at VanEck. “We are seeing increasing interest in emerging markets from clients, and we have an established track record of providing targeted exposure to key emerging markets and related themes.”
DGIN joins an emerging markets equity lineup that includes the VanEck Emerging Markets Fund, VanEck Vietnam ETF (VNM) and VanEck India Growth Leaders ETF (GLIN). GLIN provides broad exposure to Indian companies with attractive growth potential at a reasonable price. VanEck is also expecting to launch a broad-based Emerging Markets Leaders Strategy at the end of the month.
DGIN is listed on the NYSE Arca and has a net expense ratio of 0.75 per cent.