Fund Profile

Disclaimer

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
ANII aims to invest in world-class, well governed companies at the heart of India’s growth…
Overview

Aberdeen New India (ANII) is the top-performing of the three specialist India funds with a ten-year track record. The management team’s focus on finding quality companies has proven helpful in falling markets and contributed to this long-term success, as we discuss under Performance. The trust lagged the market in 2021, however, with the focus on quality not being rewarded as the market rallied.

ANII is managed by Kristy Fong and James Thom of the abrdn Asian Equities Team. The strategy is entirely bottom-up, with the managers not aiming to read the economic cycle but to find resilient companies with strong balance sheets and low levels of debt which can grow over multiple cycles. This means the NAV beta to the market tends to be low, although this is raised by modest but quite consistent levels of Gearing.

The portfolio is diversified across a variety of old and new economy sectors. Particularly important are the positions in financials (mainly banks) and information technology. Kristy and James see structural trends supporting earnings growth in these industries over the long term. Both benefit from India’s early stage of economic development when compared to China. In the short term banks have lagged the market, and Kristy and James have been adding to exposure further. They highlight market returns in 2021 were very concentrated in certain stocks and sectors, and they expect this to broaden in 2022. Furthermore, while the defensive qualities in the portfolio may have held back ANII in 2021 relative to the market, over the long run they believe this is the best way to invest – with supporting evidence being the trust’s excellent long-term track record.

Kepler View

We think the long-term fundamentals are exciting for India. Speaking to Asia fund managers, it is striking that India repeatedly comes up as an opportunity. Its demographics are stronger than China, its labour is cheaper than China, and it is winning business from multinationals concerned about exposure to China. The reforms implemented by the Modi government have also had a real impact. India has been one of the top ten improvers in the World Bank’s Ease of Doing Business Rankings for three consecutive years.

ANII’s Discount therefore looks attractive to us, purely as a way to access the growth potential in the market itself. The long-term track record of alpha generation is a bonus. As regards the outlook for relative performance, as we discuss in the Performance section, the key factors behind the sluggish performance in recent years don’t look like persistent issues to us. We think the quality style could be set to do better in the post-pandemic recovery, although of course there is no guarantee of this. There are risks to the global economy too, and India is not immune. High energy prices hurt the country, as it imports all its oil, while food price inflation would harm the consumer. ANII’s relative defensiveness should hold it in good stead if the market stumbles and so we think notwithstanding the modest Gearing, ANII looks like a relatively low risk way to invest in this potentially exciting market.

bull bear
Strong long-term record of outperformance based on successful stock-picking
Gearing can magnify market falls as well as gains
Quality approach has provided resilience in weaker markets
As a single-country emerging markets fund, it has political risk and higher volatility than a more broadly spread trust
Discount is wide and could be an interesting long-term entry point
Active approach brings chances of underperformance as well as outperformance
Continue to Portfolio

Fund History

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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