InvestNow News – 29th May – India Avenue – India Avenue Update – April 2020
Fund and Market Commentary: April 2020
The India Avenue Equity Fund (wholesale) rose 6.4% (net) for the month of April 2020, as global markets rebounded from a tumultuous March. Foreign investor outflows slowed down drastically from US$8.4b in March to US$0.03b in April. The Healthcare, Automobile and Non-Bank Financial Companies were the best performing industries.
Whilst the fall of the AUD during March helped reduced the drawdown, the opposite was true in April as the AUD bounced back to finish almost where it began at the start of March. Nonetheless the AUD’s proxy for risk-on sentiment, means that Australian investors (and to a large extent, NZ investors given the correlation between the AUD and NZ) get downside protection by investing offshore (even in some EM countries), particularly in sharply declining markets. In local currency terms, India, as measured by Nifty 50 index was one of the top performers in April, up 15%, compared to other markets such as Taiwan (+13%), the US (+13%), Korea (+11%), Brazil (+10%), MSCI EM (+9%), Japan (+7%), Russia (+6%), the UK (+4%), China (+4%) and Indonesia (+4%). Over the last 10 years, MSCI India has outperformed MSCI Emerging Market index by 68%.
India Avenue’s philosophy is focused on capturing India’s growth story by the positioning of our portfolio. As a result of ‘risk-off’ market behaviour during COVID-19, our portfolio has been negatively impacted relative to our benchmark. However, our conviction towards growth remains as the economy starts to rebound from lockdown. Our Fund is now positioned to take advantage through high quality market leaders across industries as well as cyclical businesses which rebound as the country moves out of lockdown