Columbia India Consumer ETF

INCO

Market cap $309M

India's economy grew at an annual rate of 7.8% in the quarter ending June, topping economists' expectations of 6.7% (Reuters poll), as quoted on CNBC.

INCO which focuses on 30 Indian consumer stocks, has underperformed in 2025, gaining less than 2% and lagging both global and emerging markets. INCO's long-term risk-adjusted track record is compelling, but its portfolio is trading at steep premiums to both emerging markets and the prime Indian ETF-INDA. The Indian consumer sectors, especially autos (which account for the largest share of this portfolio), face slowing growth, tighter credit, weak wage trends, and rising unemployment, clouding near-term prospects.

Among APAC equity markets, Australia has a higher beta to oil prices while India, Indonesia and Thailand have lower betas. Domestic political uncertainties have been one main reason for the decoupling trend seen in Indonesia and Thailand.

India is in the midst of an accelerated monetary easing cycle. Fiscal stimulus and rapidly decelerating inflation add demand support. Plenty more legs to consumer-focused INCO's recent rally.

April was marked by trade tensions. Overall, the S&P 500 lost 1.8%, the Dow Jones retreated 3.7%, the Nasdaq Composite was off 0.9% and the Russell 2000 plunged about 4%, April.

The 'Undercovered' Dozen series highlights lesser-known ETFs featuring in-depth analyses and offering unique investment opportunities for investors. The Mount Lucas Managed Futures Index Strategy ETF, Columbia India Consumer ETF, SPDR EURO STOXX 50 ETF, and Global X MSCI Greece ETF are recommended buys due to their strategic advantages and market positions. Invesco Dorsey Wright Industrials Momentum ETF and CoinShares Bitcoin Miners ETF receive hold ratings due to sector-specific challenges and concerns about diversification and expense ratios.

Having shined through the last decade, INCO's consumer blue chips have sold off. Fundamentals have weakened but not to the extent reflected by recent price action. INCO could lead the way higher when the tide eventually turns.

After years of exceptional returns, INCO has finally pulled back. Near-term concerns are valid but do not derail the longer-term consumer thesis. With valuation multiples de-rated, INCO's concentrated portfolio is worth a look.

Major Indian banks are expected to sustain high leverage ratios, as healthy profits and a rapidly growing economy will help them build buffers. India's economic growth, which slowed to 5.4% year over year in the July–September quarter from 8.1% in the same period in 2023, is expected to recover as most economists expect the government and companies to step up spending in the coming months.

The outlook for India's stock market is divided. While some analysts foresee threats due to slowing growth and high valuations, others see strong fundamentals.