India's weight in major global emerging-market ETFs has begun to recover recently, with India's weight in the top 20 global emerging-market ETFs by assets rising by 5-116 basis points since the end of June 2026. This recovery follows a steady decline over the past year, when the country's weight in these sample ETFs had declined by 540-998 basis points during the 12 months to June 30, 2026. The iShares MSCI Emerging Markets Ex China ETF registered the biggest increase at 116 basis points, followed by the Amundi MSCI Emerging Ex China UCITS ETF with a 113 basis points rise and the Xtrackers MSCI Emerging Markets UCITS ETF with a 99 basis point increase. According to The Economic Times, this shift reflects relative country performance within these broad investment funds, with India's stable performance contrasting with weakness in markets such as South Korea and Taiwan.
According to a WhiteOak Capital Mutual Fund study, India's Nifty 500 delivered a 7.7% annualised return over 20 years, making it the second-best performer among emerging markets, behind only Taiwan's TAIEX at 10%. When the US is included, India ranks third with the S&P 500 delivering an 11.4% annualised return over the same period. The study compares 11 emerging markets and the US across one-, three-, five-, 10-, 15- and 20-year periods, measuring returns in US dollar terms to account for currency movements. Recent performance data shows that India's BSE Sensex has reported a modest gain of around 1% since June 30, while South Korea's benchmark KOSPI has fallen nearly 19% and Brazil's Ibovespa and Taiwan's TWSE Index have declined 3% and 2% respectively during the same period.
However, India's recent performance has been weaker, with the Nifty 500 recording a negative 6.2% return over the last one year, making it the second-worst performing market after Indonesia's 24.1% decline. Over the five-year period, India's annualised return was 5.9%, placing it sixth among emerging markets, with Taiwan and Korea ahead. The study shows that while Korea delivered the highest return in the last one year with 99.3%, its 20-year annualised return was lower than India's, demonstrating how short-term leaders don't necessarily become long-term winners. South Korea and Taiwan, which have large semiconductor and AI-related companies, have come under pressure amid concerns over high valuations, contributing to their recent underperformance.
Over the 10-year period, India maintained strong performance with the Nifty 500 delivering an 8.4% CAGR, ranking third among emerging markets behind Taiwan and Korea. After including the US, India moved to fourth position as the S&P 500 delivered 15.1%. The study emphasizes that market rankings change sharply across time periods, raising questions about whether chasing recent global winners makes sense for long-term investors. Even the US, which has remained among the top three performers across years, was not the top-performing market over the last one-year period. The current ETF weight recovery reflects this dynamic, with India's stable performance compared to weakness in other major emerging markets driving increased allocation in underlying indices.
The data supports the argument that chasing the market that has delivered the highest recent return may not necessarily work for long-term investors. While diversifying across markets can help spread portfolio risk, the study suggests that investors should consider the long-term track record rather than recent performance when making investment decisions. Taiwan leads emerging markets with a 10% annualised return over 20 years, followed by India, Korea, China and Thailand. As per Duro Capital's analysis, India has shown resilience with Indians putting $60 billion of new capital every year into Indian equities, with only 6-7% of household savings in equities versus 40-50% in the US, potentially doubling domestic inflows if savings reach 12%. The current ETF weight recovery, while not necessarily signaling fresh flows, reflects improved relative performance and suggests that India's structural domestic support, combined with recovering credit growth back to 16-17% and bottoming earnings cycle, creates favorable conditions for long-term investors willing to look beyond short-term volatility.
