Investors who had the foresight or sheer luck to back a specialist India fund at the start of 2017 will be patting themselves on the back.
Six of the top 10 open-ended funds or unit trusts over the first quarter of 2017 invest exclusively in the region – the world’s sixth largest economy, one spot ahead of Britain. Predicted to grow at 7 percent for the foreseeable future, the country is continuing to attract investment.
Like other emerging market regions India boasts favourable demographics – including a young population. Laith Khalaf, senior analyst at Hargreaves Lansdown, points out that ‘around a quarter of the world’s under-25s live in India.’ This means plenty of taxpayers and spenders, and the theory is that this will translate into healthy stock market returns over the long term.
Reforms being put in place by India’s prime minister Narendra Modi has helped boost investor sentiment. Modi is pro-businesses and his various ongoing reforms have been given the thumbs up by foreign investors, although tax reforms and deregulation have not yet lived up to their expected success in moving the economy forward.
Top of the pile of India fund is Invesco India Equity, which has holdings in a number of Indian banks and automotive companies, both of which boast enormous consumer bases thanks to India’s large population and growing middle class. The fund produced returns of 18.54 per cent in first quarter – taking the silver medal.
Invesco India Equity was, however, beaten to the overall top spot by SF Webb Capital Smaller Companies Gold. Gold’s popularity as an asset is increasing as political and economic uncertainty grip the world, translating into returns of 21.13 per cent in the first three months of the year.
Funds in emerging markets outside of India also performed well over the period, with Old Mutual Asia Pacific seeing returns of 15.21 per cent. With 21.1 per cent of the fund’s investments held in Chinese equities, it is benefitting from China’s incredible growth story: its economy grew by 6.7 per cent in 2016.
Bottom of the table is the Investec Global fund slipping -9.08 per cent in the first quarter of 2017. Almost its entire portfolio, 96.4 per cent of its holdings are in oil and gas sectors, leaving it vulnerable to an oil price decline. The vast majority of other funds in the loser table specialise in the same part of the market, which has been under the cosh for the past couple of years.
See the full table of best and worst performing funds below:
|Fund||% total return Q1 2017|
|SF Webb Capital Smaller Companies Gold||21.13|
|Invesco India Equity||18.54|
|HSBC GIF Indian Equity||17.64|
|Mirae Asset India||15.95|
|Old Mutual Asia Pacific||15.21|
|Neptune Latin America||15.06|
|Waverton Asia Pacific||14.99|
|Fund||% total return Q1 2017|
|Henderson Credit Alpha||-2.93|
|F&C US Smaller Companies||-3.04|
|PIMCO GIS Commodity Real Return||-3.23|
|FP Argonaut Absolute Return||-3.40|
|Marlborough EFT Commodity||-4.21|
|Investec Enhanced Natural Resources||-4.27|
|Artemis Global Energy||-4.97|
|HC FCM Salamanca Global Property||-5.29|
|CF Canlife Global Resource||-8.01|
|Investec Global Energy||-9.08|
Source: Hargreaves Lansdown
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