While U.S. investors voted with their checkbook again last week resulting in a record 19 consecutive weeks of mutual fund outflows from domestic mutual funds — and this is a global phenomenon, not U.S.-centric one — money continues to flow toward our favorite BRIC markets.

This is all for very good reasons considering that the economic growth in BRIC countries is faster and not driven by unsustainable rising debt burdens that are the patented (but doomed to fail) strategy of many developed world governments.

In fact, India has been a standout in this global portfolio rebalancing — resulting in the explosive climb of the Bombay Sensex index to 19,500, or within striking distance of the all-time highs of 21,200 seen in January 2008.

Recently, I discussed an exciting new offering from Market Vectors in the Indian small-cap space, which fills a glaring void in the ETF universe. However, I wish there were more serious ADR providers that would go after the Indian large-cap market like the ETF providers go after anything they can repackage just to pocket the fees.

I would love to instead pay those fees to ADR providers for a purer and more company-specific play on the different areas of Indian growth, as we have very few offerings of Indian large caps — there are only 14 ADRs. That compares with 87 listed ADRs from China, 34 from Brazil and five from Russia.

Indian YTD ADR Performance

The issue here is that listing ADR fees are paid for by the companies, while ETF providers pay themselves to list their own funds.

The other issue, of course, is the GAAP conversion of local financial statements, which is cumbersome and loathed by management in some cases. It would be best if those listing fees didn’t have to be paid by the companies but could instead be paid for by for-profit ADR providers, which would very quickly go a long towards increasing the number of ADRs on the market today.

While HDFC Bank (NYSE: HDB) has been one of the best-performing Indian ADRs, the underperformance that we noted in July of ICICI Bank (NYSE: IBN) has begun to close as there was a huge valuation discount. As we’ve discussed, both banks are exposed to the same healthy fundamental trends of a growing middle class and rising domestic demand in India. IBN has always been the cheaper bank on a valuation basis and is currently trading at 2.4 times book value and 26 times trailing earnings, while HDB is even crazier-expensive valuationwise than it was in July at 40 times trailing earnings and 5.6 times book value.

HDB typically has the lowest number of non-performing loans in the country and investors are always willing to pay for quality.

On that subject, one thing about Indian stocks is that they have always traded at the most expensive valuations of any BRIC markets — while Russian stocks are usually the cheapest due to the perceived political risk and the extreme leverage to the price of oil.

Given the huge valuation gap between Indian and Chinese equities at present, it is likely that Chinese stocks should outperform in the next 12 months or so, after the PBOC gets largely out of the way. Many Chinese equities trade at single-digit multiples to earnings at present, while Indian stocks trade near the top of their valuation range in the past five years. But, those are short-term considerations, as both China and India have a place in investors’ portfolios as they offer economic growth rates in the 8% to 10% range — growth that is unheard of in the developed West.

It would have been nice to have more Indian ADRs to play the coming infrastructure boom in India — which is where the country desperately needs to play a lot of catch-up with China. The only available ADR infrastructure play is Tata Motors (NYSE: TTM), the leader in commercial vehicles, and the acquisition of Jaguar and Land Rover would certainly be welcomed by India’s rising middle class. In addition to the luxury brands, Tata is likely to offer more advanced passenger cars — currently it offers many stripped-down models by western standards — which would assure growth in coming years.

For long-term exposure to the subcontinent, Matthews India (MINDX) is a great mutual fund that primarily deals in Indian large-cap stocks. Since the fund family specializes in Asia only, you have expertise that is valuable to long-term investors in the region.