A professional investor tells us where he'd put his money. This week: David Cornell of the India Capital Growth Fund picks three top-performing companies.
The British and Indian stockmarkets have much in common. The FTSE 100's constituents make most of their sales abroad, while the same applies to India's big-caps in the BSE Sensex 30. The index does not accurately reflect the real state of the domestic economy, so investors seeking exposure to India often find they have unwittingly bought into broader global trends rather than local spice.
As in the UK, the area of the listed market that best reflects the performance and prospects of the local economy is the small and mid-cap segment. This is the engine room of both economies, though in India's case overall GDP growth is nearer 8% than the UK's 2%. Over the last 15 years, India's mid-cap equity index has averaged impressive annual returns of 12.3% in US dollars, around four times more than the FTSE All-Share.
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For UK-based investors, however, getting hold of single stocks in India can be a highly bureaucratic process. Buying an Indian equities fund is easier, especially if the assets are held in a closed-ended structure. This ensures the manager's investment strategy will not be affected by fund flows, which can unsettle the portfolio, and also allows investors to take advantage of the fact that the share price often trades at a discount to the trust's net asset value (NAV the value of the underlying portfolio).
Cashing in on credit cards
RBL Bank (Mumbai: RBK)
Consumers hit the shops
Jyothy Laboratories (Mumbai: JYL)
A global car-parts supplier
Motherson Sumi Systems (Mumbai: MSS)
David Cornell contributes to share tips on MoneyWeek on an ad-hoc basis. He resides in London but lived in Mumbai for three years where he was the Principal Advisor at Ocean Dial Advisers Private Ltd. After 2013 David moved to London and became the CIO at Ocean Dial, and he has been carrying this title for more than 9 years. David is a trustee of the Shackelton Foundation and he graduated from the University of Durham with a degree in English and History. He was also in the British Army from 1991-1995.
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