WisdomTree won the race to get the first exchange-traded fund to cover India to market today with the listing of the WisdomTree India Earnings Fund (NYSE Arca: EPI) - and it was some victory. The new ETF had a tremendous start in its first day of trading, with roughly 1 million shares changing hands.

While most of the WisdomTree products are dividend weighted, EPI is weighted by earnings, as are a few of WisdomTree's domestic ETFs. In a recent white paper, WisdomTree said that much fewer companies issued dividends in India than in other emerging markets - only 22% versus 35% for emerging markets as a whole - likely because of unfavorable tax practices and the start-up nature of many Indian companies. Because of India's restrictions on foreign investment, WisdomTree says it wanted to have as many components as possible in the underlying index, so earnings was a better criteria. The decision also resulted in an index with a lower PE ratio than other indexes covering the country, not to mention a selection of more profitable companies, according to the white paper.

Most importantly, the underlying index was constructed with India's foreign capital restrictions in mind, a problem that has hit the iPath MSCI India ETN (NYSE Arca: INP) particularly hard (see "An ETN Behaving Badly: INP"). WisdomTree's methodology includes an investable weighting factor that reflects both available float and the government's foreign investment limits.

The WisdomTree India Earnings Index includes approximately 150 stocks. It has a dividend yield of 1.24% and a PE ratio of 13.99. Among its top five components are Reliance Industries Ltd. (13.35%), Oil and Natural Gas Corp. Ltd. (6.27%), Infosys Technologies Ltd. (5.78%), Bharti Airtel Ltd. (3.93%) and ICICI Bank Ltd. (3.32%). Energy is the largest sector in the index at 24.88%.

EPI charges an annual expense ratio of 0.88%. You can read the prospectus here.

India seems like it may overtake China for the title of "Hottest Emerging Market" if it hasn't already, and WisdomTree is not the only firm with the market on its agenda (see Murray Coleman's article "New Paths Into India Offer Alternative Indexing Strategies"). PowerShares is also planning to launch its own India ETF later this month. The PowerShares India Portfolio (NYSE Arca: PIN) will track the Indus India Index of 50 Indian stocks.