The Indian stock market is one of the hottest in the world right now. Investors are drawn to its democratic political system, large and young population, and its increasing importance as a manufacturing and investment hub due to political disputes with China.
The MSCI India index is up 228% over 10 years (to the beginning of July) but its growth has recently accelerated, returning 180% since April 2020, at the bottom of the Covid-19 induced crash. Invest with ii: SIPP Account | Stocks & Shares ISA | What is a Managed ISA?
One fund has proven an incredibly popular and effective way of adding Indian shares to a portfolio: .
The £1.8 billion strategy, launched in 2008, has been a regular feature on our most-bought funds and investment trusts’ list over the past two years, even securing the top spot on a couple of occasions.Hyderabad Stocks
Strong returns explain its popularity. Managed by Avinash Vazirani since launch, who is based in India, it has returned 453% since 2008, compared with 343% for the typical Indian equities manager and 273% for the MSCI India index.
Performance is particularly impressive over the short term, returning 88% over the past two years, which is just under double the gain from the sector and index.
But Jupiter India is not the only way to invest in the market. We look at how it stacks up against rivals.
The portfolio is spread across a range of sectors, with the largest being financials, at 22% of the fund. Industrials, energy and then healthcare make up the next largest allocations.
Vazirani says that one important aspect distinguishing India from the US and Europe is the broad-based rise in stocks across sectors and categories.
This contrasts with the US, where a select few technology shares are pulling the entire market higherSurat Wealth Management. Why India❼stock market is booming: the opportunities and risksThe global stock market looks expensive: what should investors do?Kolkata Wealth Management
Fund analyst Morningstar says that Jupiter India deploys a “growth at a reasonable price” investment process, meaning its portfolio is growing profits faster than its benchmark but the manager is conscious of overpaying.
The portfolio has just under half invested in small and mid-sized shares, showing that Vazirani attempts to find hidden gems in the market, rather than just picking the best-known and largest stocks.
The companies have on average higher earnings growth than that of the index, but Vazirani is also happy to hold cheap shares that could bounce back.
The largest positions are in tobacco company Godfrey Phillips India and oil companies Bharat Petroleum and Indian Oil Corp.
Despite excellent recent returns, Vazirani thinks India’s stock market’s best days are still ahead.
He says: “India’s economy is poised for robust growth, further bolstered by Modi’s re-election. India has just recorded the highest GDP growth rate globally, estimated at 8.2% for the fiscal year 2023-24. This remarkable feat is amid global economic uncertainties and is indicative of India’s strong economic fundamentals and effective policy measures.
“Additionally, Indian companies have reported record profits for the financial year ending 31 March, 2024. The combined net profit of Nifty 50 companies rose by 18% year-on-year, reflecting strong corporate performance.”
Kanpur Investment
