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Defaqto on the Baring India Fund

View of Defaqto insight analyst for funds Fraser Donaldson

Donaldson says: “The fund will aim to achieve its investment objective by investing at least 70 per cent of its total assets at any one time in Indian equities, and in equity-related securities of companies who are themselves, or whose underlying equities are, domiciled in or exercising the predominant part of their economic activity in India. Or those which are quoted or traded on the stock exchanges in India. Up to 30 per cent may be invested outside India within the Indian subcontinent, such countries as Sri Lanka, Bangladesh and Pakistan..

“The fund manager, Ajay Argal is head of Indian equities and has been recently hired from Birla Sunlife where he ran the India advantage fund and the India excel fund. He will run this new fund from Hong Kong and will have access to not only the Indian equities team at Baring Asset Management, but also the Asian equity team and global sector team. 

“The portfolio will be highly concentrated with between 30 and 50 holdings and will operate an investment style that is actively managed, following a growth at a reasonable price investment philosophy which helps to avoid any over reliance on pure growth or pure value approaches.  The fund will use the MSCI India 10/40 index as a representative market index. 

This fund may be too specialised for some but there is no doubt that for those looking to pick up on a growing trend, the growth in the Indian market is appealing. There is an increasing appetite for the consumption of consumer goods by the youthful Indian population and with government plans to invest in the infrastructure productivity should improve and provide a further boost to the economy. Indeed, the IMF had predicted that the Indian economy would grow by around 7.5 per cent in 2011/12 in their world economic outlook dated September 20, 2011.

“Investors and advisers that are less familiar with the Indian market, but agree that they should be exposed to Indian equities, may feel that this is better achieved through an emerging economy BRIC fund that invests in Brazil, Russia, India and China. Or within a more established emerging markets or Asia Pacific ex Japan fund, leaving the asset allocation in these economies to the fund manager.”

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