Indian Summer – the funds to take advantage

In the past India has been presented as an exciting investment opportunity for UK investors, but never really gained mainstream attention, be it from the media, investors or even fund management houses. For example, very few 100% India focused funds have been launched. But the appetite for exposure to India is increasing. In fact, this research article was inspired by a request from an 80-20 Investor member asking how to gain exposure to Indian equities. But why the growing interest?

India's economic trajectory has often been compared to that of China, which is a much more familiar investment theme for UK investors. However India has now surpassed China as the world's most populous country (home to over 1.4 billion people), which therefore offers its own attractions. India's economy continues to rapidly expand. GDP expanded 7.8% annually in the three months to the end of June 2023, while China's "reported" GDP expanded at just 6.3% annually, much lower than the 7.3% expected by economists.

It's also interesting to note that as relations between the U.S. and China continue to come under strain, India is seen as a viable substitute in supply chains, collaborative projects and manufacturing. It's why we've already seen moves from companies like Amazon, Apple and Boeing to diversify away from China and invest in India.

India also produces the world's largest number of computer science engineering graduates annually. The country's digital public infrastructure, known as "The India Stack," has been systematically developed since 2010. The introduction of the Unified Payments Interface in 2016 has seen a 40-fold increase in mobile payments over the past five years. This combination of a robust tech sector, skilled workforce and developing digital infrastructure makes India an interesting emerging tech story.

But there's more to India's attraction than just its growing tech sector. The UK government's development finance institution, British International Investment (BII), plans to invest about $1 billion in Indian climate-related projects, including bio-fuel, by 2026. This move is part of a larger roadmap agreed between the UK and India. On top of that, in June the World Bank approved $1.5 billion in financing to accelerate India's low-carbon energy sector.

JP Morgan has also made the decision to include Indian government bonds in its emerging markets bond index from June 2024 which is expected to significantly benefit India's economy. This move aligns with India's aspirations of becoming a $5 trillion economy and the inclusion could attract about $25 billion in foreign investment into India's government securities. The influx of foreign investment could lower borrowing costs, strengthen the rupee and potentially help improve India's credit rating. India's importance on the world stage was also demonstrated by Prime Minister Narendra Modi's hosting of the G20 summit in New Delhi last month.

In fact, the G20 topped what was already an impressive summer for India in global investment markets. During the first quarter of 2023 Indian equity funds were the worst performing asset class for UK investors, with the average Indian equity unit trust falling over 5%.

However, since the 1st June Indian equities have bounced back and are now the best performing asset class as we head into the autumn (or should that be "Indian summer"?), with the average Indian equity fund rallying more than 12% since June. That's almost twice the return of any other asset class/sector, as shown in the table below.

Sector/Asset	% return 1st June to 1st October
India/Indian Subcontinent	12.29
Financials and Financial Innovation	6.58
Latin America	6.19
North American Smaller Companies	5.39
North America	4.77
Commodity/Natural Resources	4.41
Global Emerging Markets	2.65
Global Equity Income	2.35
Sterling High Yield	2.00
Japan	1.97
UK Equity Income	1.81
Cash	1.62
Global	1.57
Global EM Bonds Blended	1.55
China/Greater China	1.33
Sterling Corporate Bond	0.96
Global EM Bonds Local Currency	0.89
Global EM Bonds Hard Currency	0.83
Mixed Investment 40-85% Shares	0.58
Flexible Investment	0.46
Technology & Technology Innovation	0.44
Asia Pacific Excluding Japan	0.16
UK All Companies	0.09
Sterling Strategic Bond	0.08
Mixed Investment 20-60% Shares	0.05
Targeted Absolute Return	-0.02
Mixed Investment 0-35% Shares	-0.31
Japanese Smaller Companies	-0.54
UK Direct Property	-0.99
Global Bonds	-1.02
Europe Excluding UK	-1.11
UK Gilts	-1.41
Property Other	-1.43
UK Index Linked Gilts	-2.07
UK Smaller Companies	-3.56
Healthcare	-3.68
European Smaller Companies	-5.62
Infrastructure	-6.82

It's no wonder then that Indian equities have made a reappearance in the BOTB and BFBS tables this month, but will the uptick in momentum last? One thing to bear in mind is that Indian equities are now expensive according to history.

But for those looking for direct exposure to Indian equities there are limited choices in the investment trust, unit trust and ETF universes. You can find some of these in the respective BFBS tables, which I have now expanded to include more options. However, what about if you want to increase your exposure to Indian equities through a diversified fund that also invests across Asia or other emerging markets?

To answer that I have analysed all of the unit trusts and investment trusts available to retail investors on the main investment platforms to show the funds with the greatest exposure to Indian equities. The table below includes details of the sector each fund resides in, whether it is a unit trust or investment trust as well as its ISIN code.

 

Type	Fund name	ISIN Code	Sector	% exposure to Indian equities
Investment Trust	JPM - JPMorgan Indian IT plc	GB0003450359	IT India/Indian Subcontinent	99
Investment Trust	abrdn - New India Investment Trust plc	GB0006048770	IT India/Indian Subcontinent	99
Unit trust	Jupiter - India	GB00B2NHJ040	India/Indian Subcontinent	99
Unit trust	Stewart Investors - Indian Subcontinent Sustainability	GB00B1FXTG93	India/Indian Subcontinent	97
Unit trust	Liontrust - India	GB00B1L6DV51	India/Indian Subcontinent	97
Investment Trust	Ocean Dial Asset Management - India Capital Growth Ld	GB00B0P8RJ60	IT India/Indian Subcontinent	95
Unit trust	FSSA - Indian Subcontinent All	GB00BDG1BM66	India/Indian Subcontinent	92
Unit trust	Stewart Investors - Asia Pacific Sustainability	GB00B0TY6V50	Specialist	46
Investment Trust	First Sentier Investments IT - Scottish Oriental Smaller Companies	GB0007836132	IT Asia Pacific Smaller Companies	46
Investment Trust	Frostrow Capital LLP - Pacific Assets Trust plc	GB0006674385	IT Asia Pacific	45
Unit trust	Stewart Investors - Asia Pacific Leaders Sustainability	GB0033874768	Specialist	44
Unit trust	Stewart Investors - Asia Pcfic and Japan Sustblty	GB0030184088	Asia Pacific Including Japan	42
Unit trust	Stewart Investors - Global Emerging Markets Sustainability	GB00B64TS998	Specialist	41
Unit trust	Stewart Investors - Global Emerging Markets Leaders	GB0033874545	Specialist	36
Unit trust	BNY Mellon - Asian Opportunities	GB00B7QJH976	Asia Pacific Excluding Japan	32
Unit trust	BNY Mellon - Sustainable Global Emerging Markets	GB00BN772L94	Global Emerging Markets	32
Unit trust	FSSA - Global Emerging Markets Focus	GB00BZ8GV678	Global Emerging Markets	29
Unit trust	BNY Mellon - Global Emerging Markets Opportunities	GB00BVB2Q700	Global Emerging Markets	28
Unit trust	Schroder - Asian Discovery	GB00B5ZS9V71	Specialist	27
Investment Trust	Baillie Gifford - Pacific Horizon Investment Trust PLC	GB0006667470	IT Asia Pacific	25
Investment Trust	JPM - JPMorgan Emerging Markets IT plc	GB00BMXWN182	IT Global Emerging Markets	23
Unit trust	FSSA - Asia Focus	GB00BWNGXJ86	Asia Pacific Excluding Japan	22
Unit trust	Morgan Stanley - Developing Opportunity	GB00BL6Y0R97	Global Emerging Markets	21
Unit trust	Allianz - Total Return Asian Equity	GB00B1FRQV53	Asia Pacific Excluding Japan	21
Investment Trust	Fidelity (FIL Invt Intl) - Fidelity Asian Values PLC	GB0003322319	IT Asia Pacific Smaller Companies	21
Unit trust	Omnis Investments Ltd - Omnis Global Emerging Markets Equity Leaders	GB00BJRD8D37	Global Emerging Markets	21
Unit trust	Fidelity - Asia	GB00B6Y7NF43	Asia Pacific Excluding Japan	20
Unit trust	IFSL - Marlborough Far East Growth	GB00B0NVCN62	Asia Pacific Excluding Japan	20
Unit trust	Liontrust - Emerging Markets	GB00B8J6SV12	Global Emerging Markets	20
Unit trust	Baillie Gifford - Pacific	GB0006063126	Asia Pacific Excluding Japan	19
Unit trust	FSSA - Asia All Cap	GB00BWNGXB01	Asia Pacific Excluding Japan	19
Unit trust	iShares - Emerging Markets Equity Index (UK)	GB00B84DY642	Global Emerging Markets	18
Unit trust	CT - Global Emerging Market Equity	GB00B10SJD63	Global Emerging Markets	18
Unit trust	FTF - Martin Currie Emerging Markets	GB00BP9LK754	Global Emerging Markets	18
Investment Trust	Mobius - Mobius Investment Trust Plc	GB00BFZ7R980	IT Global Emerging Markets	18
Unit trust	MI Somerset - Emerging Markets Discovery	GB00BK5SP702	Global Emerging Markets	18
Unit trust	L&G - Global Emerging Markets Index	GB00B4KBDL25	Global Emerging Markets	18
Unit trust	Stewart Investors - Worldwide Leaders Sustainability	GB0030978729	Global	18
Investment Trust	Aberdeen Standard Fund Managers Ltd - Aberdeen New Dawn Investment Trust PLC	GB00BBM56V29	IT Asia Pacific	18
Investment Trust	Aberdeen Standard Fund Managers Ltd - Asia Dragon Trust plc	GB0002945029	IT Asia Pacific	18
Unit trust	Janus Henderson - Emerging Markets Opportunities	GB00BJ0LFC20	Global Emerging Markets	18
Investment Trust	Schroder Investment Management Ltd - Schroder Asia Pacific	GB0007918872	IT Asia Pacific	17
Unit trust	Schroder - Asian Alpha Plus	GB00B5BG4980	Asia Pacific Excluding Japan	17
Unit trust	Jupiter - Asian Income	GB00BZ2YML94	Asia Pacific Excluding Japan	17
Investment Trust	Aberdeen Standard Fund Managers Ltd - abrdn Asia Focus Plc	GB00BMF19B58	IT Asia Pacific Smaller Companies	17
Unit trust	BlackRock - Asia	GB00B7VS8S56	Asia Pacific Excluding Japan	17
Unit trust	T. Rowe Price - Asian Opportunities Equity	GB00BF0S8S26	Asia Pacific Excluding Japan	16
Unit trust	JPM - Emerging Markets Sustainable Equity	GB00BL0DTP33	Global Emerging Markets	16
Unit trust	abrdn - Emerging Markets Equity	GB0033228197	Global Emerging Markets	16
Unit trust	BlackRock - Emerging Markets	GB00B4R9F681	Global Emerging Markets	16
Unit trust	Ninety One - Emerging Markets Equity	GB00B8HWDL62	Global Emerging Markets	16
Unit trust	Invesco - Emerging Markets ex China (UK)	GB00B3RW8X82	Global Emerging Markets	15
Unit trust	CT - Asia	GB0001441137	Asia Pacific Excluding Japan	15
Unit trust	LGIM - Future World Emerging Markets Equity Index		Global Emerging Markets	15
Unit trust	Fidelity - Sustainable Asia Equity	GB00B84Q8M70	Asia Pacific Excluding Japan	15
Unit trust	VT - Downing Global Investors	GB00BHNC2499	Global	15
Unit trust	Fidelity - Index Emerging Markets	GB00BHZK8D21	Global Emerging Markets	15
Unit trust	MI Somerset - Global Emerging Markets	GB00B3F27B14	Global Emerging Markets	15
Unit trust	abrdn - Asia Pacific Equity	GB00B0XWNF82	Asia Pacific Excluding Japan	15
Unit trust	Baillie Gifford - Emerging Markets Growth	GB0006017825	Global Emerging Markets	14
Investment Trust	Schroder Investment Management Ltd - Schroder Asian Total Return Investment Company	GB0008710799	IT Asia Pacific	14
Unit trust	LF - Asia Pacific	GB00B719QW87	Asia Pacific Excluding Japan	14
Unit trust	Baillie Gifford - Emerging Markets Leading Companies	GB00B06HZM12	Global Emerging Markets	14
Unit trust	UBS - Global Emerging Markets Equity	GB00B7L34154	Global Emerging Markets	14
Unit trust	BNY Mellon - Emerging Income	GB00B7JLPD03	Global Emerging Markets	14
Unit trust	Royal London - Emerging Markets ESG Leaders Equity Tracker	GB00BJ7JMM83	Global Emerging Markets	13
Unit trust	Barings - Eastern Trust	GB0000799923	Asia Pacific Excluding Japan	13
Investment Trust	Franklin - Templeton Emerging Markets Investment Trust Plc	GB00BKPG0S09	IT Global Emerging Markets	13
Unit trust	abrdn - Emerging Markets Equity Enhanced Index	GB0033309757	Global Emerging Markets	13
Investment Trust	JPM - JPMorgan Asia Growth & Income Plc	GB0001320778	IT Asia Pacific Equity Income	13
Unit trust	Allianz - Emerging Markets Equity	GB00B0WDH832	Global Emerging Markets	13
Unit trust	abrdn - Asia Pacific Equity Enhanced Index	GB00BGHW1Q36	Asia Pacific Excluding Japan	12
Unit trust	abrdn - Emerging Markets Income Equity	GB00B8B02G41	Global Emerging Markets	12
Unit trust	CT - Asia Pacific Equity	GB0033143115	Asia Pacific Excluding Japan	12
Unit trust	Jupiter - Merian Asia Pacific	GB00B1XG8C90	Asia Pacific Excluding Japan	12
Unit trust	Invesco - Global Emerging Markets (UK)	GB00B3RW7S64	Global Emerging Markets	11
Investment Trust	Invesco Asset Management - Invesco Asia Trust plc	GB0004535307	IT Asia Pacific Equity Income	11
Unit trust	T. Rowe Price - Emerging Markets Discovery Equity	GB00BJL36Z72	Global Emerging Markets	11
Unit trust	Vanguard - Global Emerging Markets	GB00BZ82ZY13	Global Emerging Markets	11
Investment Trust	Ingot Capital Mgmt Pty Limited - Utilico Emerging Markets	GB00BD45S967	IT Global Emerging Markets	10
Unit trust	BNY Mellon - Asian Income	GB00B8BYQK88	Asia Pacific Excluding Japan	10