Aberdeen New India 21 January 2021
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.
To achieve long-term capital appreciation by investing in companies which are incorporated in India or which derive significant revenue or profit from India.
Aberdeen New India Investment Trust
Aberdeen Asset Management
Adrian Lim, Flavia Cheong, Kristy Fong, James Thom and Pruksa Iamthongthong
Association of Investment Companies (AIC) Sector
Country Specialist: Asia Pacific ex Japan
Dividend Distribution Frequency
Latest Market Capitalisation
Latest Net Gearing (Cum Fair)
Latest Ongoing Charge Ex Perf Fee
(Discount)/Premium (Cum Fair)
Daily Closing Price
Aberdeen New India Investment Trust (ANII) owns a portfolio of high-quality Indian equities chosen for their strong balance sheets, sustainable earnings and good governance. These characteristics have helped the trust to outperform its benchmark and peers over the long run, with particularly good performance on the downside (see the Performance section). Performance in 2020 has also been strong, with ANII losing less than the market in the crash and rallying strongly at the end of the year.
ANII is managed by Kristy Fong and James Thom of the Aberdeen Standard Investments (ASI) Asian equities team. Stock selection is built on the bottom-up analysis of this team of analysts and portfolio managers based in Asia. The analysts look for companies with a position of market leadership which should allow them to grow faster than peers over the long run. While the managers aim to enter positions at advantageous valuations, they will accept paying a higher multiple for the best companies. The team view strong corporate governance as an important characteristic of a quality company (see the ESG section), and it is a key issue in determining whether they invest.
India has been hit hard by the pandemic, both medically and economically. Kristy and James are cautiously optimistic for this year, but have built a portfolio which is stylistically and sectorally balanced and not overexposed to the old or new economy. Net gearing is currently positive but modest. The managers took advantage of last year’s volatility to invest in high-quality companies when the market sold off, including leading tech company Info Edge and utilities company Power Grid Corporation.
ANII’s shares currently trade 12.5% below NAV, close to their five-year average.
India faces serious near-term economic challenges, and most importantly that of recovering from the severe economic impact of the pandemic. However, the Indian market contains some exciting long-term investment prospects benefitting from long-term secular trends which won’t be stopped by these challenges.
Kristy and James aim to build a portfolio made up of these companies. They include new-economy stocks such as internet giant Info Edge or the IT outsourcers in the portfolio, as well as old-economy stocks such as Godrej Properties, a leading real estate developer benefitting from India’s urbanisation. In our view the diversity in the portfolio is one of the trust’s strengths, and should hopefully lead to steadier and more resilient performance over the long term.
These characteristics should hopefully ensure a continuation of the highly attractive combination of outperformance and downside protection which ANII has demonstrated over the long term. ANII has outperformed all of the other India specialist trusts over five years whilst maintaining superior downside performance, a testament to the success of its quality growth approach. In our view this success is particularly notable given the brave decision not to hold Reliance Industries, the largest stock in the index which has performed particularly strongly but which has not to date met the managers’ quality criteria.
|Strong long-term record of outperformance based on successful stock-picking||Gearing can magnify market falls as well as losses
|Quality approach has provided resilience in weaker markets
||As a single-country emerging markets fund, it has political risk
|Discount is wide and could be an interesting long-term entry point
||Continued outperformance of Reliance Industries (not held) might be a relative headwind