After covering single-country exchange-traded funds (ETFs) for the last few weeks, we are going to move into covering a series of sector-specific emerging market ETFs, beginning with the Columbia India Consumer ETF (INCO).
Sector-specific ETFs seek holdings where companies share a related product or service. As the name of the fund suggests, INCO fully concentrates on investments in the consumer industry in India.
Since its inception in August 2011 under the brand EGShares — a brand that has nine ETFs that all trade within the United States — INCO’s policy has been to hold a maximum of 30 Indian market-cap-weighted consumer stocks. Each of the 30 securities is capped at a maximum weight of 7% of the total portfolio, which helps to provide diversification and more balanced exposure to the Indian consumer sector.
One of the biggest risks investors may face when considering INCO is the fund’s low total assets under management of only $77.81 million. This subjects the fund to liquidity risk and results in relatively high management fees, as is evident in its expense ratio of 0.89%.
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