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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
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Overview

abrdn New India Investment Trust's (LON:ANII) managers aim to invest in the highest-quality companies which are exposed to the outstanding long-term secular growth trends in India. Managers Kristy Fong and James Thom, of the abrdn Asian Equities Team, look for companies with sustainable earnings growth potential, strong balance sheets and, crucially, good governance. The focus on quality means there is a bias to less cyclical companies which can grow sustainably over time.

Kristy and James argue that India is in a strong position over the short to long term. The macro fundamentals look stable, while a reforming government has created a pro-business environment and multinationals are looking at India as a site for investment. They highlight a surge in capex, boosted by government expenditure, which is creating opportunities for a number of Portfolio companies.

ANII trades at a discount of 20% at the time of writing. The board has been active in buying back shares, while there is also a tender offer scheduled to be made in 2027 if performance targets are not met (see Discount), and a continuation vote to be held in the same year.

One reason for the discount is likely to be the disappointing medium-term Performance. However, there are encouraging signs that the market is shifting back to favour ANII’s style. In particular, the decision on governance grounds to not hold Adani Group companies or Reliance Industries has been helpful over recent months, which we think may be a sign that governance issues are more important to investors than they have been in recent years.

Analyst's View

We think India is one of the most exciting growth stories in markets today. It has a young, educated population and the current government has created a business-friendly environment, which seems to be creating opportunity for companies and encouraging investment. Additionally, the global geopolitical situation is playing into India’s hands: not only is the country winning manufacturing business from China, but it is in a position where it can trade with both the US and its rivals. India looks set to see a rapid rise in living standards in the coming years, which will provide earnings growth opportunities for companies.

ANII has an attractive strategy for investing in this growth story. The focus on governance has added value for investors in recent years, through allowing the managers to avoid the fallout from the Adani Group. We think this is a valuable reminder that ignoring the quality of governance can be dangerous in the long term, even if it leads to good returns in the short term. Additionally, we think the focus on dependable earnings streams is an attractive characteristic for a long-term core strategy, as it should in theory bring resilience and lower volatility. Performance has been disappointing in recent years, but we think this is, in part, due to style. High-growth companies and then value companies have been in favour, while more defensive growth companies have not. We think this could change as the global economy adjusts to higher interest rates and weak growth in key countries, and this could provide scope for improved performance.

Bull

  • ESG pedigree has proven its ability to add value
  • Bias towards quality provides defensive characteristics
  • Trades at a wide discount, with buybacks and tender offer to support the rating

Bear

  • As a single-country emerging market fund, it has higher political risk and volatility
  • Has underperformed over the medium term
  • Gearing can add to downside losses
Continue to Portfolio

Fund History

27 Feb 2024 Fund Analysis
ANII outperformed the MSCI India benchmark in 2023…
04 Aug 2023 Investing in Indian stocks, with ANII Manager Kristy Fong - Podcast: Trust Issues #20
We talk high valuations, the upcoming election, and corporate governance...
28 Jul 2023 Fund Analysis
ANII’s wide discount may present an attractive entry point…
03 Mar 2023 Fund Analysis
ANII’s wide discount may present an attractive entry point…
15 Sep 2022 Same same but different
We discuss the case for emerging markets at different stages of development…
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 Five ways to play Indian equities
India is struggling economically – but 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...
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