Fund Profile

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This is a non-independent marketing communication commissioned by abrdn. 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
High quality Indian companies at a discount...
Overview

Aberdeen New India (ANII) is managed by Kristy Fong and James Thom who take a bottom-up approach to stock selection with the aim of delivering long-term capital growth. Their focus is on identifying quality companies – those that have strong balance sheets, low levels of debt and that can demonstrate sustainable earnings growth over the long term. They place strong emphasis on management teams that adhere to ESG principles as they believe that this is a measure of quality in itself. Over the years, Kristy and James have aligned the Portfolio to the many long-term secular drivers of growth they see in India, such as its strong demographics and rising incomes. Financials and technology are the two largest sector exposures which are seen as being key beneficiaries of India’s development.

The trust has a strong track record of performing relatively well in past years when the market fell. However, in 2022, investors have rewarded cyclical and value investment strategies. Kristy and James take the view that with fears of recession and inflation haunting markets, the quality focus of their strategy should demonstrate better resilience in the coming weak economic environment.

ANII trades at a wide Discount of 18.5%, perhaps owing to underperformance in recent years and some risk-off sentiment after commodity price spikes caused by the Ukraine war. The board has introduced a five-year tender offer for 25% of the shares, the clock starting from 01/04/2022, alongside a five-year continuation vote which has yet to be approved by shareholders.

Kepler View

We believe that the investment case for India is strong, driven by several structural tailwinds including a growing population and an educated labour force with rising income levels. In turn, this is leading to growing consumerism, creating new markets in many industries especially amongst financials and the technology sector. The Modi government has introduced reforms to the tax and legal system and, with its pro-business stance, India is improving rapidly as a place to do business according to the World Bank’s Ease of Doing Business Rankings. India is at an earlier stage of its development than China and its economic growth rate is projected to remain high for some years ahead. Increasingly, multinationals are looking at India as a location to set up local plants as an alternative to China, attracted by the cheaper cost of labour and lower geopolitical risks.

Quality investment strategies have underperformed since the pandemic, however we believe that ANII’s bias towards quality companies could make the portfolio more resilient to downside market moves. The Portfolio is diversified across new and old economy stocks but also aligned to sectors that are set to benefit from India’s long-term development towards a consumer economy. The latest market wobble has pushed ANII to trade close to a 20% discount and we view this as an attractive discount with which to gain exposure to the Indian growth story. A new tender offer and continuation vote will provide a long-term backstop to the rating.

Bull

  • Good long-term performance record
  • Bias towards quality provides defensive characteristics
  • Trades on a wide discount presenting entry opportunities

Bear

  • As a single country emerging market fund it has higher political risk and volatility
  • Has underperformed over the short term
  • Gearing can enhance downside losses
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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