- India is undergoing significant change, which provides exciting opportunities for investors
- Jupiter India is one of our favourite ways to access the country’s long-term growth potential
- Long-term performance remains strong, but periods of volatility should not be ruled out
Avinash Vazirani, the fund’s manager, has an impressive 20-year track record. Our analysis suggests he has been successful in identifying companies with strong growth prospects, which have often been overlooked by other investors. In our view he is one of few fund managers able to outperform the broader Indian stock market over a prolonged period of time, though there are no guarantees.
Avinash Vazirani is happy to search for investment opportunities off the beaten track. While most funds investing in India tend to focus on larger companies in the main Indian stock market, the manager also invests in higher-risk small and medium-sized companies. We believe this has boosted the fund’s returns over the long run.
The Indian economy is currently undergoing historic change. This presents investors with plenty of opportunity, but could also cause disruption and stock market volatility over shorter periods. We remain excited about India’s longer-term potential and believe investors prepared to accept a greater level of risk by investing in an emerging market are well-placed with such an experienced fund manager.
India – a year in review
Since his election as Prime Minister in 2014, Narendra Modi has aimed to improve the way India carries out business and lift millions of people out of poverty.
Over the past year he has introduced a number of radical reforms. Last November most of India’s cash was removed from its economy in an effort to crack down on corruption and ensure more people and businesses pay tax. He also introduced a new Goods & Services Tax in July this year, with the aim to improve India’s inefficient and complicated tax system.
Pushing through reform so quickly left many companies unprepared and caused some disruption to both businesses and the economy. However, Avinash Vazirani is confident about the longer-term impact these changes could have.
For example, simplifying the way taxes are paid could reduce the cost of doing business in India. Company logistics costs have already reduced markedly and complicated distribution chains have been streamlined. The government should also benefit from more people and businesses paying taxes, leaving it with more to spend on well-needed infrastructure.
An increasing number of India’s population have also been provided with the means to open a bank account. According to Avinash Vazirani, there is now $75 billion more cash in Indian bank accounts than last year. Banks, asset managers, and insurance companies could all benefit as more people save and direct money to legitimate financial institutions. He has invested in companies such as Reliance Capital, State Bank of India, and ICICI Prudential Life Insurance, which could profit from these changes.
Data and internet usage has also grown significantly and this could have a big impact on how businesses operate and consumers spend. 402 million of India’s 1.3 billion population currently use the internet, so there is also plenty of scope for growth in this area. To benefit, Avinash Vazirani invests in the shares of a number of telecoms tower operators, where profits are rising, according to the manager.
The Indian stock market performed well over the past year. The Jupiter India Fund also delivered an attractive return, although it lagged the return of the broader Indian stock market. Low exposure to the basic materials and telecoms sectors proved costly, as companies in these areas tended to perform well.
A number of other investments performed well, including the fund’s largest investment in oil company Hindustan Petroleum. Avinash Vazirani believes the company is overlooked and dismissed by other investors. While many view the business purely as an oil refiner, he takes into account other successful areas, such as its marketing division.
Over the longer term the manager has built an impressive track record investing in Indian shares. He is prepared to invest a large part of the fund in companies that aren’t included in its benchmark. We feel this provides significant opportunity to outperform over the long term, although shorter-term periods of underperformance should also be expected. Please also remember past performance is not a guide to future returns.
Jupiter India - performance since launch
Past performance is not a guide to the future. Source: Lipper IM 29/02/2008 to 30/11/2017
|Annual percentage growth|
| 30/11/2012 -
| 30/11/2013 -
| 30/11/2014 -
| 30/11/2015 -
| 30/11/2016 -
Past performance is not a guide to the future. Source: Lipper IM to 30/11/2017