Baring takes flexible approach to India
Baring Asset Management - Baring India Fund
Type: Offshore Oeic
Aim: Growth by investing in Indian equities and equity-related securities of companies listed in India or carrying out the main part of their business in India
Minimum investment: Lump sum £2,500, euro 3,500, $5,000
Investment split: At least 70% in Indian equities and related securities, up to 30% in companies listed outside India that are within the Indian sub-continent, with significant business activities in India
Place of registration: Dublin
Charges: Initial 5%, annual 1.5%
Commission: Subject to negotiation
Baring Asset Management has introduced an India fund for its new recruit, Ajay Argal. The fund will invest in 30 to 50 equities and related securities in Indian-listed companies or those listed elsewhere that run the majority of their business in the region. Up to 30 per cent will be invested in firms within the Indian sub-continent, which covers the area of South Asia.
Baring Asset Management believes this part of the world will continue to produce high growth that is driven by the development of upper middle and higher class consumer markets, low government and personal debt, and increased government spending. It says that as India main export is information technology services that are supplied on long-term contracts, this provides India with some protection from the extremes of global economic conditions.
Discussing the merits of investing in India, Hargreaves Lansdown investment analyst Richard Troue says: “With a young population and growing middle class, many believe India’s economy is set to experience strong growth over the long term, despite some weaker short-term performance.
“Ajay Argal, manager of the recently launched Baring India fund, will combine analysis of individual companies with an overview of wider economic issues which could affect the region to capture this growth.”
Troue points out that India is the world’s biggest democracy, but its political system is complex and at times fractious. This leads him to think that a consideration of wider issues alongside stockpicking is important.
Troue says: “Ajay Argal has 18 years’ experience managing Indian equities, but he will also have the support of Baring’s 25-strong emerging markets team. His approach will involve selecting 35 to 50 companies with an emphasis on finding those set to experience high growth that is not reflected in their share price.”
Troue notes that a concentrated portfolio means each holding can contribute significantly to performance, but it also means higher risk. “Argal also has the flexibility to invest up to 30 per cent of the portfolio in Sri Lanka, Bangladesh and Pakistan if he identifies attractive opportunities among companies there which conduct a significant proportion of their business in India.”
There are a number of themes running through the portfolio that Troue highlights. “These include the growing appetite among Indians for consumer goods of all kinds; increased demand for financial services; and the opportunities presented by companies involved with infrastructure development and India’s successful IT outsourcing industry,” he says.
Turning to the potential drawbacks of the fund, Troue says: “Argal is an experienced fund manager with a well-resourced team to leverage ideas off. But I would like to see how he settles in at Baring Asset Management and see him build a successful track record in his new role before considering the fund further.”
Scanning the market for potential competitors, Troue says: “I like the Jupiter India fund, which is managed by Avinash Vazirani. He believes valuations are now very attractive and that some of his fund’s holdings have the potential to grow their earnings by 25 per cent. He suggests the Indian economy remains robust, and half of the fund is invested in the financial and consumer sectors, which offer particularly strong growth opportunities,” says Troue.
Suitability to market: Good
Investment strategy: Good
Adviser remuneration: Average