Abrdn New India Investment Trust’s net asset value fell 8% in the year to 31 March, trailing the MSCI India Index which returned -6%.
The trust highlighted Adani Group, higher interest rates and a wider sell-off in growth stocks as key factors impacting relative performance.
While not owning a stake in Adani, chair Michael Hughes said the company was a significant driver in Abrdn New India’s positive relative performance in the second half of the trust’s financial year.
Adani drove Indian equity markets higher in the first half of the financial year, before a US short seller report accused the firm of stock manipulation and accounting fraud which saw its share price drop sharply. Hughes said Abrdn New India’s investment manager had long-standing reservations over Adani’s governance.
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Commenting on the trust’s overall performance, Hughes added: “In a period of higher interest rates and inflation, as witnessed during the Year, one would typically expect quality stocks to be more resilient. However, with global macro factors such as geopolitical risks shaking up markets these fundamentals have been largely ignored. Growth stocks favoured by the investment manager were disproportionately sold off and value stocks rose sharply for much of 2022.
“That said, it is worth highlighting that, in a turbulent market as seen in the first three months of 2023, [the trust’s] core quality names held up well and several of the previously underperforming growth stocks had already begun to recover towards the end of the year.”
Over the period, share price fell 8.9%, while the trust’s discount widened to 20.2% from 19.4%. Across the year, 2,127,206 ordinary shares were bought back to the tune of £11.8m.
The trust will offer a 25% tender offer if it underperforms over the five-year period ending 31 March 2027.
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