Fidelity Investments has added a sterling share class to a Sicav fund that invests in India. The India focus fund mainly holds shares listed in India but also invests in companies deriving most of their income from the region.
Factors affecting growth in the region are different from other emerging markets, which is why Fidelity is offering investors a pure Indian fund. The fund will invest in 60 to 80 stocks and will have a bias towards small and mid-caps.
The fund is managed by Michael Gordon, Fidelity's chief investment officer, Asia Pacific ex Japan. He joined Fidelity as investment director in 2000 and became managing director of the Australia office before taking his present role in 2002. He has 18 years' investment experience at Rothschild Australia, Schroder Investment Management Australia and Fidelity.
Gordon will take a bottom-up approach to stock selection, with a preference for companies with strong balance sheets and good cashflow. He will draw on Fidelity's network of analysts and will conduct meetings with the management of companies he is researching.
India is under-researched and Fidelity has been impressed with the pace of economic growth in the region. Like China, it is seeing the emergence of educated workers earning high salaries, which has led to increased consumption. Exports have risen and there is strong demand for Indian goods, both domestically and internationally.
However, this fund lacks the diversity of a general emerging markets fund, which may make it too risky even for investors who want a high-risk element to their portfolio.
According to Standard & Poor's, Fidelity's South-east Asia fund is ranked 72nd out of 165 funds based on £1,000 invested on a bid-to-bid basis with gross income reinvested over three years to October 11, 2004.