Baring Asset Management (Barings), the international investment firm, has today announced the launch of the Baring India Fund. The fund, set to launch on 7 December, will be managed by Ajay Argal, who recently joined Barings' team in Hong Kong. He was previously lead manager of the four-star Morningstar-rated Birla Sunlife India Advantage Fund and the India Excel Fund, and has more than 18 years of investment experience.
The primary investment universe of the Fund will be Indian equities and equity-related securities of companies listed in India or which carry out the predominant part of their economic activity there. This will account for at least 70% of the Fund at any given point. In addition, Barings will have the scope to invest up to 30% of the Fund in companies listed outside India and within the Indian subcontinent which still conduct a significant proportion of their business within India. The fund will have a relatively high concentration of between 30 and 50 holdings.
Barings believes that the Indian economy will continue to sustain the high GDP growth, driven by fast-developing upper middle and high-class consumer segments, low personal and national debt, and extensive government spending.
Ajay Argal, manager of the Baring India Fund, said, "With a stable and vibrant political system in place, we believe the Indian economy is well positioned to embark on a period of productivity-led growth and that this should translate into a period of strong equity returns for investors. Domestically, India's youthful population is fast developing a preference for consumer goods, while demand for housing and for financial services is likely to remain strong for many years to come as the pace of urbanisation accelerates. The government plans to invest US$1 trillion on upgrading India's roads and energy sectors and this should help improve productivity as well as provide a further boost to growth.
"Unlike many emerging economies, India's main export is information technology services, where a well educated workforce and cost advantages make it a global leader. These services tend to be supplied on a long-term contract basis, providing India with a degree of shelter from the extremes of the global economic cycle."
Barings has a history of providing strong and consistent mutual fund performance in the world's emerging markets and is responsible for investing US$288 million of assets in Indian equities, as at the end of October 2011.1 Particularly attractive areas of investment which are likely to be featured in the Baring India Fund include: Consumption - there is a growing appetite in India for consumer goods of all kinds from small everyday items to large aspirational purchases; Financial Services - currently a relatively low proportion of Indians use banks and financial services and as urbanisation and economic development increases, we expect this to continue; Infrastructure - large capital outlays in roads, rail, ports and irrigation are planned; and IT Services - forecast to grow from US$8bn today to US$15bn by 2014.2
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