ASHOKA INDIA EQUITY INVESTMENT TRUST: Indian equities offer a summer and more opportunities
investment trust Shares Ashoka India has just celebrated its fourth anniversary as a company listed on the London Stock Exchange.
In terms of investment returns, it’s done a good job, with shareholders sitting on a 75 percent gain at launch.
Nevertheless, the managers believe that more attractive returns can be achieved in the medium term.
The fund, valued at £196 million, is managed from Singapore and Mumbai by White Oak Capital, an investment house specializing in Indian equities. In total, White Oak has over £4 billion under management.
It manages Ashoka India Equity in a prescribed manner. To start with, the modus operandi is built around stock picking.
It does not hold cash in the fund, nor does it adjust the portfolio to account for a shifting economic background.
Instead, it owns companies that it believes will generate returns under all circumstances. To ensure that the trust does not involve undue risk, the portfolio is diversified across all major sectors such as financial, consumer and IT equities.
It also includes a mix of companies: those that depend on the domestic economy and others that are more export-oriented.
“The Indian stock market comprises more than 3,000 companies,” said Ayush Abhijeet, adviser to the trust.
“Of those, only 1,800 have stocks that are actively traded. We monitor approximately 800 publicly traded companies with market caps over $200 million [£166million].’
Currently, the trust has shares in 81 companies. Some are household names, such as IT giant Infosys and banks ICICI and HDFC.
Others are less so. Abhijeet says that aside from India’s top 200 companies, equity investment research is limited, meaning there is scope for fund managers to identify companies that are undervalued by the market.
“We have investment teams focusing on key market sectors,” he adds. ‘It is their job to come up with new investment ideas. These are then discussed by the sector teams and if there is a consensus we will buy or wait. It’s a joint effort.’
Not only are the teams looking for opportunities to outperform the market, but they are expending just as much energy avoiding banana peels—companies with poor corporate governance or whose business model is threatened by technological change.
Successful long-term participations include the chemical company Navin Fluorine, a manufacturer of refrigerant gases. “We bought it when the trust was launched in July 2018,” Abhijeet says.
It has increased sixfold in value and represents 1.5 percent of the trust’s assets. It has been one of our most successful investments.”
Shares are held for an average of three years, although Abhijeet says this is more of an outcome than a goal.
“If a stock hits a price target that we’ve set, or if we think the valuation seems excessive, we’ll sell and reallocate the proceeds to a new investment opportunity.”
While acknowledging that rising geopolitical tensions and continued high oil prices could drive the Indian stock market off course – indeed, its share price has fallen nearly 11 percent this year – Abhijeet says there is no other stock market in the world that has a better chance of good fortune. fund managers to outperform.
The trust’s exchange identifier is BF50VS4 and the ticker is AIE. The annual ongoing charges are 0.34 percent. Such a fund should only represent a small part of an investment portfolio.