Aim: Growth by investing in Indian companies and companies deriving their business from India
Minimum investment: Lump sum $250
Investment split:100% in Indian companies or companies deriving their business from India
Place of registration: Luxemburg
Charges: Initial up to 5.25%, annual 1.5%
Commission: Subject to negotiation
Tel: 020 7678 4500
ABN Amro’s India equity fund is a Luxemburg-based Sicav denominated in dollars.
Assessing the market suitability of the fund Michael Philips proprietor Michael Both says: “If the case for investing in China is good, India’s prospects on several measures may be better. It is a giant democracy able to undercut most of the world with a well educated, export minded population.”
On the positive side, Both feels there is undoubtedly the prospect of long-term growth at rates well above the UK and other developed economies. He says: “There is a risk premium for investing in India, which is partly due to the ensnarling of business by red tape – or worse – and sometimes the difficulty of repatriating investment profits. But for those wanting to diversify and who are prepared for these and currency risks, India deserves very serious consideration.”
Both points out that ABN Amro already has experience in the region through its generalist emerging markets fund so a country specific one for India is a logical extension rather than a leap of faith into a bandwagon started by someone else.
“ABN Amro has long established itself in emerging markets and already has a large presence in India thanks to its banking network. Its fund managers are no slouches – Artemis is its UK investment arm – so although one might generally prefer funds with a track record, you might be prepared to give them the benefit of the doubt here.”
Considering potential drawbacks Both says: “I can’t actually find anything bad to say which makes a pleasant change.” However he found the ABM Amro Asset Management light on useful information, especially as the key features was only available in Dutch. He says: “Since we are legally required to disclose about three trees worth of compliance whenever recommending funds, one could expect ABN to make an effort to make this easy using PDFs. I couldn’t get its UK site to work at all for most of a day which all suggests that a bit of effort on improving its UK broker interface might not be time wasted.”
Addressing the issue of possible competitors Both suggests the JP Morgan India investment trust and specialist Indian open ended funds.
In conclusion Both says: “ABN was very cagey about the level of commission available to intermediaries despite an unambiguous initial sales charge of 5.25 per cent. It eventually suggested 3 per cent was typical and that trail commission would never be considered. To some extent this may be irrelevant since a fee can of course be separately negotiated with your client, especially if held via a wrap platform such as Transact.”
Suitability to market: Good
Investment strategy: Good
Adviser remuneration: Average