Jupiter India I Acc
Why is this fund on our radar?
India has been one of the standout growth economies of the past few years. Driven by good demographics - typified by a young, well-educated and urbanising workforce - India has been turning its long held potential into strong economic growth . The country’s stock market has responded in kind, delivering exceptional returns for investors from a large and rapidly growing number of listed companies.
Jupiter India is well positioned to capture this potential due to manager Avinash Vazirani’s extensive investing experience in the country. He started investing in the mid 1990’s and has a good degree of freedom in his process to select the best companies he identifies, rather than being restricted to holding large, legacy companies. As a result, the fund scores as the most differentiated to the benchmark on our quant models, which has supported very good, above market returns over numerous time periods.
Skip to Our VerdictPerformance
As is the case with many investment vehicles focussed on a single country, performance will often be inextricably linked to the fortunes of that country. However, relative performance can be affected by a fund manager’s skill in identifying companies that are capable of outperforming, whether that be because the company is in a growing industry, or the firm itself is taking market share from peers through better operational performance. This is where the manager of Jupiter India, Avinash Vazirani’s background really comes into play. Having been investing money in India since 1995, he has plenty of experience to draw on when selecting his concentrated portfolio of Indian equities. As a result, stock selection is likely to be the primary driver of the fund’s relative performance.
Furthermore, the deep resources of the wider Jupiter firm enable Avinash to research all areas of the markets, where other managers may overlook. This has supported Avinash in identifying many small and mid-sized companies with great prospects but that haven’t been recognised by other investors. As such, he has generated considerable outperformance of his comparators by buying smaller companies early and holding them as their qualities are recognised by other investors. Whilst this has been successful for performance over the long-term, it can lead to periods of notable volatility and underperformance should this area of the market be out of favour, such as in periods of economic slowdown.
The growth of the Indian market has led to a wave of new companies coming to market through initial public offerings (‘IPOs’). Avinash’s experience means he often has good knowledge of these firms as they come to market, making him well-placed to identify those with higher quality which has helped performance in the latest bull market.
In the chart below, we have shown cumulative performance over the past five years versus the trust’s peer group. One factor worth considering when looking at performance of India-focussed investments is that they will account for the impact of local capital gains tax, although this won’t be accounted for when looking at an index return.
Five-year performance
Past performance is not a reliable indicator of future results
Portfolio
Avinash looks to combine his deep knowledge of the Indian market with the sizeable resources of the Jupiter firm to build his portfolio of between 60 and 80 holdings. As well as the wider global emerging markets team, Avinash uses quantitative screen and external sources to identify potential ideas.
These potential holdings are then analysed on their cash-flow characteristics, looking to find those with robust earnings, good margins and market leading positions. Avinash ensures he undertakes meetings with company management to ensure potential holdings are adhering with prudent corporate governance practices and disciplined financial management.
Whilst he will consider companies from all backgrounds, Avinash looks to capture the growth coming from the long-term structural trends India is benefitting from, such as more of the population joining the formal economy, government reform and an increase in wealth of the country. As a result, the portfolio can often have a bias towards the financial, industrial and healthcare sectors, although this is predominantly an output of where the manager is finding the best ideas.
Avinash’s flexibility has historically led to a bias in small and medium-sized companies as this is often where the best growth opportunities exist. Due to the scale and growth of the Indian market, these opportunities are often overlooked by other investors, leading to a rich hunting ground for investors with the experience and resources to analyse a wide range of companies.
Market cap split
Our Verdict
India offers excellent growth potential due to its young and dynamic population. The economy is one of the fastest growing in the world, with many of the tailwinds that have driven this arguably structural, meaning there is plenty of scope for the exciting upwards trajectory to continue, and for investors to capture this growth, although stock market valuations have increased over the past few years as well.
We believe Jupiter India is very well-placed to achieve this growth, primarily as a result of manager Avinash Vazirani’s experience, and the fund’s resulting tilt towards small and mid-sized companies. Smaller companies not only offer better growth potential over the long-term, but also exposure to the domestic economy, which in India’s case has been one of the key drivers of the economy’s success. Avinash’s flexibility means his portfolio is often positioned very differently to both the peer group and the index, making the fund stand out against a passive investment and meaning returns can be equally differentiated, as well as allowing him the opportunity to avoid some of the higher-valued stocks in the market.
Key Risks
- Investing in a single country fund can expose investors to very specific risks
- The fund’s smaller company bias can contribute to higher volatility
- After years of strong performance, Indian equity valuations are elevated relative to history
