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WisdomTree lists India minus state owned enterprises
There’s more to India than cricket, curries and the Commonwealth.
In an effort to spice up its India-oriented product suite, WisdomTree is spinning in with a new India tracker that bowls out state-owned enterprises. The WisdomTree India ex-State-Owned Enterprises Fund (IXSE) will track a WisdomTree index that defines an SOE as a company with government ownership of more than 20% of outstanding shares.
The index uses a modified float-adjusted market capitalization weighting process which means the share amounts used in calculating the index reflect only shares available to investors. More information on the index is available on WisdomTree’s website. The top six constituents are below.
| Reliance Industries Ltd (RIL IB) | 11.59% |
| Infosys Ltd (INFO IB) | 9.94% |
| Tata Consultancy Services Ltd (TCS IB) | 7.59% |
| Hindustan Unilever Ltd (HUVR IB) | 4.57% |
| ICICI Bank Ltd (ICICIBC IN) | 4.48% |
| Kotak Mahindra Bank Ltd (KMB IB) | 3.91% |
Analysis – hit it for 6
WisdomTree already has a couple of ETFs that remove state owned enterprises. They are the $300 million XSOE, which removes them from emerging markets; and the $140 million CXSE which removes them from China. Both funds have done well, and have outperformed their plain vanilla competitors (such as ASHS/FXI for China and IEMG for emerging markets). There is sound logic behind the investment strategy: WisdomTree believes that privately owned companies will behave more in the interests of shareholders that state-owned ones, which are more subject to political pressure.