IFAs need to stop thinking of India and China as emerging markets and rename them developing markets, says Fidelity fund manager Arun Mehra.
Mehra, head of investment strategy for the Fidelity India focus fund, thinks investor mentality towards India and China needs shifting. He says it would be more helpful for investment opportunities if the countries were referred to as developing markets rather than emerging markets.
Fidelity's fund is a bottom-up portfolio of between 50 and 75 stocks and is biased towards small and mid-cap shares.
Mehra says the Indian market offers opportunity for long-term growth but political instability could influence financial markets.
Following the Indian elections earlier this year, the share prices of many leading companies fell but recovered once the coalition government took control.
Mehra says: “There are many multinationals that have now started outsourcing in India and this is something that bolsters the whole economy. I think of India as a developing market rather than an emerging market. It has emerged but is still 10 to 15 years away from becoming a dev-eloped market. It would be better if investors could think like this.
“Of course, the whole thing could be derailed by politics. There is the coalition but if this broke up, then that would have an effect. It is important to think of times like this as an opportunity, though.”