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 |
