India is the focus of attention this week as it’s the start of Diwali, one of the most important religious holidays in the country. The annual five-day event, also known as the festival of lights, includes a main celebration on the third day, which this year falls on Thursday 4th November.
After a strong summer for its stock market, investors in India also have reason to celebrate: the MSCI India index is up more than 25% year to date. But after such a strong run, is now the time to invest or the time to take profits?
Darius McDermott, managing director of FundCalibre, said: “The Indian stock market is clearly benefiting from continued domestic interest, given the increasing economic momentum.
“The country has one of the best demographics in the world and, if you add in the continued impetus of a strongly reformist and pro-growth government, the recent announcement that some $1.3 trillion will be spend improving infrastructure over the next 25 years, and the ability of India to benefit from changing global trade relationships in the region, you have a very strong case for investment in the country.
“It remains one of our preferred long-term emerging market investments, but it has had a very good run recently and is certainly not looking cheap today. That said, the Indian stock market rarely looks good value versus other emerging markets and, while it is a volatile asset class, good money can be made over the long term. This is evidenced by returns over the past three, five and ten years, which have reached 63%, 64% and 158% respectively.”
Three funds to consider
Goldman Sachs India Equity Portfolio
Investors who want to invest directly in the country may like to consider Goldman Sachs India Equity Portfolio. It is focused on investing in sound businesses of all sizes and company meetings are a crucial part of the process. It’s an all-weather fund that benefits from a well-resourced and experienced team based on the ground in India and Singapore.
Stewart Investors Asia Pacific Leaders Sustainability
Those wanting a slightly more diversified approach could consider an Asian equity fund like Stewart Investors Asia Pacific Leaders Sustainability, whose managers will allocate money to companies throughout Asia, and will constantly adjust the portfolio to fit with the opportunities available. This fund currently has almost 45% invested in Indian firms.
GQG Partners Emerging Markets Equity
Another alternative would be a wider emerging markets fund like GQG Partners Emerging Markets Equity. GQG Partners is one of the newest and fastest growing asset management businesses, having only launched in 2016, but Rajiv Jain, founder of the company and lead manager of this fund, has over 25 years’ investment experience. This fund currently has 23.5% invested in Indian stocks.