Fund Profile

Disclaimer

Disclosure – Non-Independent Marketing Communication

This is a non-independent marketing communication commissioned by Aberdeen New India. The report has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is not subject to any prohibition on the dealing ahead of the dissemination of investment research.

Overview
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Overview

Aberdeen New India owns a concentrated portfolio of stocks in India which are selected for the high quality of their financials and corporate governance. The trust draws on the research of a team of Asia-based managers led by Kristy Fong and James Thom with deep knowledge of the market and a differentiated approach developed over many decades of Aberdeen’s presence in the region.

Their analysis aims to uncover those companies which can sustainably grow their earnings and which should beat the market over the course of an investment cycle, with the focus on quality and repeatable earnings rather than cyclical winners having led to particularly strong performance in down years.

The trust offers exposure to the huge domestic market in India which is growing thanks to favourable demographics, with significant exposures to consumer staples companies and financial services companies which are rolling out services to the growing middle class.

The trust has outperformed the market handsomely over the past five years, with NAV total returns of 94.5% compared to the MSCI India’s returns of 70.3%. The vast majority of this is due to stock selection rather than industry allocation; a validation of the bottom-up approach the team takes.

In mid-2018 the managers took out a gearing facility which allowed them to take advantage of the cheap valuations in India in the second-half sell-off. They remain modestly geared at 4%, but in line with their cautious approach are unlikely to gear up further unless significant value emerges, such as another market sell-off.

The discount is at 12.3%, having come in substantially since Modi won re-election in May. However, it still remains wider than the average emerging markets trust, which trades on a discount of 8.4%.

The trust hasn’t paid a dividend since 2005, and is unlikely to do so this year, with the managers focused entirely on capital growth.

Kepler View

Aberdeen New India is an attractive way to play the long-term growth in the Indian domestic market which is being fuelled by the country’s favourable demographics. The discount makes this potentially an interesting entry point, although we recognise that sentiment is poor toward the global economy at the current time, even if the domestic situation in India is more positive. The trust has a proven tendency to outperform in down markets which should be attractive if the global economy does turn. Furthermore, the investment case for this trust is fundamentally a long-term one given the approach of the managers, and so the possibility of near-term volatility should be of secondary importance.

Bull Bear
A track record of outperformance thanks to stock-picking which validates the approach
The trust does not pay a dividend
A well-resourced team with a strong presence in the region The portfolio is more expensive than the market, although this is due to the higher quality stocks it holds
A focus on corporate governance which adds another way to boost shareholder returns

Continue to Portfolio

Fund History

03 Aug 2022 Fund Analysis
High quality Indian companies at a discount...
30 Mar 2022 You say tomato…
Do it yourself or put it into a global fund and leave it to the experts - our analyst debate the merits of each approach...
01 Feb 2022 Fund Analysis
ANII aims to invest in world-class, well governed companies at the heart of India’s growth…
13 Oct 2021 Beyond the Middle Kingdom
As momentum falters in the emerging markets powerhouse, we examine the options for investors outside China...
28 Jul 2021 Fund Analysis
ANII offers exposure to exciting growth stories in India…
21 Jan 2021 Fund Analysis
ANII is the top-performing India trust over five years…
07 Oct 2020 The real reason to invest in India...
India is struggling economically – could there be a value opportunity in the stock market?
09 Sep 2020 Fund Analysis
ANII’s quality characteristics could stand it in good stead in a weak economic period…
05 Mar 2020 Don't panic: the case for investing in Asia this ISA season
We examine the relationship between stock market and GDP growth, before debating the case for an allocation to Asia...
26 Feb 2020 Fund Analysis
ANII is the top-performing Indian trust over the last five years…
16 Jan 2020 Drifting apart: how emerging markets have become less correlated
We examine how correlations between different emerging markets have evolved, and whether single country strategies could diversify returns going forward....
28 Aug 2019 Quality street: can the dominant style continue to outperform?
For several years, quality as an investing style has dominated, outperforming both value and growth. We examine why the case for quality remains strong and the importance of taking an active approach…
20 Aug 2019 Fund Analysis
Aberdeen New India buys high quality stocks exposed to the fast-growing Indian economy….
12 Dec 2018 Fund Analysis
The trust has outperformed the market handsomely over the past five years thanks to strong stock selection...
View all

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