According to Gary Greenberg, head of emerging markets at Hermes Investment Management, a new India is emerging, and the space once held by “outdated conglomerates” is being claimed by businesses willing to compete through innovation and efficiency.
“Investing in India during this transitionary phase is challenging, but identifying companies that will outperform on a long-term basis will be key,” he says.
However, while bullish on the prospects for India, Chris Metcalfe, investment director and fund manager at IBOSS, believes the best way to play India is via generalist emerging market funds. This is because while the outlook for the country remains strong, he argues the stock market, and certain sectors within, look “very expensive” relative to history.
“For us to hold an Indian fund directly would put the onus on ourselves to call the top of the market and this is a situation which we feel is better served by the underlying managers,” Metcalfe says.
“We usually aim to hold two or three high conviction and truly active managers in this space.”
At present, he holds three emerging market funds in the IBOSS portfolio management service; Newton Emerging Markets, Henderson Emerging Markets and Invesco Perpetual Emerging Markets.
Of the three funds, Newton has the highest allocation to India at present, at over 30% of assets.
