Diversification’s an important part of any portfolio. Being too exposed to one market or one type of investment can create volatility. By investing in a wide range of assets and stocks, you can help minimize that risk and make your portfolio much more versatile.
One way to help diversify is through exchange-traded funds (ETFs) that can give you a broad mix of stocks in one investment.
Another way to diversify: by looking outside of your home market or even continent. That’s where the BMO India Equity Index ETF (TSX:ZID) can be very useful. As the name suggests, this ETF will give you exposure to Indian businesses. From banks to tech companies, the energy sector and other industries, the fund gives you a good mix of holdings.
However, it’s not an ETF that’ll give you hundreds of different stocks. Since it’s a very particular ETF, it’s limited in the number of companies that would meet its criteria and investing strategy. The three top holdings in the ETF make up just over half of the fund’s total assets. Reliance industries makes up 20.5% of the assets, followed by Infosys at 16.9% and HDFC Bank which represents 13.8%.
The stocks in the fund are reasonably priced, averaging a price-to-earnings multiple of 16.6 and a price-to-book ratio of just 1.8. There’s a lot of growth potential for India and with this ETF down more than 10% this year, now could be a great opportunity to buy it at a reduced price. The fund’s up 35% over the past five years.
