What we required in order to present you with the added risk of a fund dedicated to a single country was a reasonably large and diversified capital market that offered a portfolio manager the opportunity to diversify the portfolio even inside a single country. As the Japanese and Chinese economies grew and new industries blossomed, we thought that test was met. We now feel that the Indian economy and capital markets also meet our test. With this matter, then, we're adding three India funds to the list: Matthews India, WisdomTree India Earnings (ETF) and PowerShares India (ETF). We may add a couple of other funds to the list over another few issues.

Why India?... Frequently before once we spoke about Asia and its rapid growth we cited the twin dynamos powering that growth, China and India. Coupling the 2 served its purpose, but we now believe both are accepting separate identities. As we have been listening and reading on the length of days gone by four or five months, we came to the conclusion there are differences in the paths that China and India will be overpowering the months ahead. Both will be growing rapidly (or intend to) but one is worried about too-rapid growth (China) while one other is aiming at much faster growth as time goes by (India).

To sort things out, and to acquire a better feel for the Indian economy and the capital market, we spoke to Sharat Shroff, the portfolio manager of the Matthews India Fund. The very first point that Shroff made is that "a few of the days ahead for India (speaking of growth) may be a lot better than what has been seen within the last 2-3 years." For a few historical perspective, Shroff noticed that India's growth rate found after the us government adopted a policy of setting up the economy in the first 90's. Ever since then, as more reforms were gradually introduced, growth has picked up further. By 1995, India's growth hit the high single-digits range and remained there (on average). Such growth is now taken because the benchmark.

Shroff emphasized that why is India's growth different from other emerging countries is that in large part it originates from domestic demand, not from exports or commodities. There is no large-scale overhaul that India has to undergo, he remarked. What Shroff is driving at is that in the post-recession world China's trade surpluses and the U.S. deficit must shrink as they are unsustainable. India faces no such issues.

The next point advanced by Shroff is that the private sector accounts for roughly 80% of India's growth. The significance of that is that in India we're speaing frankly about businesses that are oriented toward profits and return on capital. This is not always the case elsewhere in Asia. Because of these conditions, India offers the investor to be able to purchase high quality companies with solid business models.

In terms of Matthews India, Shroff said that the fund does not necessarily purchase the large cap, world-renowned companies (the Indian blue chips). As Shroff use it, in the event that you compare our portfolio with the benchmark, you will realize that two-thirds of our portfolio is made up of small- and mid-cap stocks. We try to be a little more forward-looking. What the fund is searching for are those (smaller) companies which can be "participating in the country's growth and have the potential to become among the larger companies two, three or perhaps five years from now."

The Indian market...We asked Mr. Shroff, what index you need to watch to keep track of the Indian market. He answered that the Sensex is the traditional index followed. But in recent times, the professional community pays more focus on the S&P CNX Nifty Index.

For valuations, the Indian market, says Shroff, is selling at a price-earnings ratio around 15-16 times and at about 3 x book value. This really is slightly above historical average valuations. Also Shroff pointed out that the Indian market has traditionally been expensive in comparison to its emerging market peers. The premium has ranged from as low as 15% to as high as 45%. Today he puts the premium at the reduced end of the range.

There's some justification for the premium, he added. The return on equity for Indian firms is in the 18-20% range, which, as he use it, "is quite robust." Another reason refers back again to the inner sources of India's growth so you get less volatility than you do from a "commodity producer."

That's not to imply that the Indian market isn't volatile. "Even although the economy may be dancing to its tune," Shroff warned, "when foreigners were taking out money from all emerging markets in 2008, the Indian market went via a very severe correction. (In fact) in the last three to four years the Indian market shows some correlation with the S&P 500." (We find that recently to own been true of emerging markets as a whole.)

Shroff looked to the problem of volatility more than once. He was preaching to the converted. We're restricting our advice concerning the Indian funds to Venturesome investors only. This is actually the same policy that individuals have been following with regard to the pure China funds. The policy is not written in stone, but the entire world economy would need to be functioning closer to normal before we'd consider any relaxation.

After the interview with Shroff, we were much more convinced that the single-country India funds belong inside our fund list. Not just is India growing rapidly, but we expect you'll begin to see the emergence of more investment -- worthy companies as opportunities arise. Taking into consideration the potential, you can appreciate why Asia and the emerging markets, generally, are becoming the middle of the investment world's attention.