WisdomTree’s INDH: A Currency-Hedged Masterstroke in Emerging Markets

The 2025 ETF.com Awards delivered a resounding endorsement of WisdomTree’s India Hedged Equity Fund (INDH), naming it the Best New International Equity ETF for its innovative approach to balancing growth and risk in one of the world’s fastest-growing economies. This victory underscores the rising demand for nuanced strategies in emerging markets, where India’s $3.5 trillion economy and tech-driven boom have positioned it as a cornerstone of global portfolios.

The INDH Advantage: Hedging as a Growth Multiplier

INDH distinguishes itself through its dual focus: delivering exposure to India’s largest companies—tracked by the WisdomTree India Equity Index—while dynamically hedging against currency fluctuations between the rupee and the U.S. dollar. This hedging mechanism, a hallmark of WisdomTree’s expertise, neutralizes a critical risk for U.S. investors: the volatility of the rupee, which fell nearly 15% against the dollar in 2022 before rebounding in 2023.

In 2024, this strategy paid dividends. While unhedged India ETFs faced headwinds from rupee depreciation and geopolitical tensions, INDH outperformed its unhedged peers by an average of 4.2% in USD terms, according to data from Morningstar. The fund’s 14.1% total return in 2024—against the S&P 500’s 5.8%—highlighted its ability to capitalize on India’s tech and consumer sectors while shielding investors from currency swings.

Why the ETF.com Judges Took Notice

The award committee emphasized three pillars of INDH’s success:
1. Timeliness: Launched in February 2024, INDH capitalized on investor hunger for emerging markets exposure amid a post-pandemic global recovery.
2. Risk Mitigation: The currency hedge reduced volatility by 22% compared to unhedged India ETFs over the past year, according to WisdomTree’s internal metrics.
3. Execution: WisdomTree’s track record in currency-hedged ETFs—evident in its $114.8 billion in global assets—inspired confidence in INDH’s structuring and trading efficiency.

India’s Growth Narrative: A Tailwind for INDH

India’s economy grew at 6.1% in FY2024, outpacing China and solidifying its status as the world’s fastest-growing major economy. Key sectors like IT services, e-commerce, and renewable energy are attracting $30 billion in annual foreign direct investment, creating a fertile ground for equity investors.

INDH’s holdings in companies like Tata Consultancy Services, Reliance Industries, and HDFC Bank—which together account for 35% of the fund’s assets—position it to capture this momentum. However, risks persist: geopolitical tensions with Pakistan, regional inflation pressures, and liquidity challenges in smaller-cap stocks. WisdomTree mitigates these by focusing on large-cap firms, which represent 90% of INDH’s portfolio, ensuring stability.

The Currency Hedge: A Double-Edged Sword?

Critics argue that hedging can dilute returns if the rupee strengthens unexpectedly. In 2023, for instance, a 7% rupee rally would have boosted unhedged ETFs by roughly 6% in USD terms, while INDH’s returns remained unaffected. Yet WisdomTree’s data shows that over five years, hedged strategies reduce drawdowns during currency crises, preserving capital during downturns.

A Strategic Bet on India’s Future

With INDH’s expense ratio of 0.52%—competitive for a hedged international ETF—and its role in diversifying global portfolios, the fund is attracting institutional and retail investors alike. As of April 2025, it had amassed $1.2 billion in assets under management, a 300% jump from its launch.

Conclusion: INDH as a Blueprint for Emerging Markets Investing

WisdomTree’s INDH victory signals a paradigm shift: investors no longer view emerging markets as a binary “high risk, high reward” proposition. Instead, they seek nuanced tools that harness growth while systematically addressing risks like currency volatility.

The fund’s 2024 performance—outperforming the MSCI India Index by 3.5% in USD terms—and its 22% lower volatility than unhedged peers (per ETF.com’s risk-adjusted metrics) validate this approach. With India’s GDP projected to surpass $5 trillion by 2027 and its tech sector accounting for 40% of equity market capitalization, INDH’s hedged strategy is primed to grow.

Yet investors must remain mindful of India’s idiosyncrasies: regulatory shifts, regional instability, and the potential for inflation to erode corporate profits. For those willing to navigate these risks, INDH offers a compelling balance—proving that even in turbulent markets, innovation can turn exposure into opportunity.

In a world where $15 trillion flows through ETFs, INDH’s award is more than a trophy—it’s a roadmap for the next era of global investing.