Fund Commentary: May 2019

The month of May was a very eventful period for Indian markets, as May 23rd marked the national election results. Indian equity markets hit an all-time high with the incumbent government and Prime Minister, Narendra Modi, coming to power at the centre for the second time in a row, backed by a thumping majority. This continuity brings in much needed stability and policy predictability as well continuing India’s growth and reform agenda. This is discussed in greater detail on the next page.

Indian equity markets rose strongly over the last 3 months, driven by improving sentiment, expectations for corporate earnings to pick up and greater appetite by foreign investors. Over this period, the India Avenue Equity Fund was up 14.52%, outperforming the index by 1.49%. Pleasingly, the fund delivered outperformance of its benchmark in a broader rally as investors sought companies with more favourable growth and valuation. However, the long-term relative numbers remain impacted by 1 year, 2018 (as can be seen below) driven by a handful of large index stocks. Despite the nuances of the index (heavy stock and sector concentration that can cause large relative performance deviations) stock selection has added significant value (~+9%) when we dig deeper into the fund’s performance attribution since inception.