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 Investment Trust (ANII) aims to identify Indian companies with high and sustainable earnings, strong balance sheets and good corporate governance and buy them when they are on attractive valuations.

The process leans on the bottom-up research of the Aberdeen Standard Asian equities team, particularly Kristy Fong and James Thom, who have managerial responsibilities for ANII. Their successful stock-picking has led the trust to outperform considerably over the last five years. As we discuss in the Performance section, the trust is the top-performing Indian closed-ended fund over that period, with the lowest volatility and the best performance in down markets.

The team view strong corporate governance as an important characteristic of a quality company, and it is a key issue determining whether they invest or not. Kristy and James believe that giving up these principles for short-term gain could lead to worse losses in the future.

India’s stock market has been weak over the past six months as the economy has absorbed a mini-financial crisis and the impact of government reforms. The quality tilt of ANII has been advantageous, and the managers have been taking the opportunity to top up their highest-conviction picks on cheaper valuations.

With these India-specific reasons and the ongoing coronavirus scare, discounts in the region have drifted out and ANII’s shares trade on a 13.1% discount to NAV.

Kepler View

India is an exciting long-term prospect. The country’s demographics mean there are huge long-term growth opportunities in goods and services serving a growing young population. ANII has many high-quality companies which are plugged into this growth, such as the financials offering bank accounts, mortgages and basic financial products to those who have never had them before.

In the short term, India has been suffering the fallout from a crisis in the non-bank financial sector (which has benefitted ANII’s holdings), and from the short-term impact of a series of government reforms which have good long-term intentions of improving governance, addressing corruption and encouraging financial inclusion. ANII’s quality portfolio should be more resilient to these challenges, while the multi-year perspective Kristy and James take means their eyes should remain on the long-term secular opportunities.

Thanks to these domestic challenges and the ongoing coronavirus pandemic, ANII’s discount has widened out to a highly attractive 13.1%. This is considerably higher than the average of the AIC Global Emerging Markets sector, which is 9.1%. While we accept that single-country funds have their own risks which might warrant a slightly wider discount, we think this is excessive, and that sentiment to the whole region has been weakened by the crisis in China. This is therefore an attractive entry point to ANII for the long term.

Bull Bear
Strong long-term record based on successful stock-picking Does not pay a dividend
Quality approach has provided resilience in weaker markets Gearing can magnify market falls as well as losses
Discount is wide and could be an interesting long-term entry point As a single-country emerging markets fund, it has political risk
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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