InvestNow News – 17th July – India Avenue Update – 30th June 2020
Fund and Market Commentary: June 2020
The India Avenue Equity Fund (wholesale) rose 4.65% (net) for the month of June 2020, outperforming its benchmark by 1.68%, following the 0.84% outperformance in May. Our approach is to focus on a broader set of Indian companies, not just the ones typically found in Global/Emerging Market funds or Emerging market indices. Despite this approach not being favoured since 2018 (mid and small cap stocks in India have underperformed Nifty 50 by over 50% over this period), we remain confident that our philosophy of building a portfolio from the insights and experience of experts on the ground in India is the best way to play the country’s long-term growth story.
Over the last three months, there has been a change to broader participation outside the top 15 companies by market cap, possibly suggesting we are finally seeing a reversal of the dominance by the index heavy weight names – top 5 of the index is over 40%. We have also seen the Nifty Mid-cap index outperform the Nifty 50 since the start of the year.
After significant outflows from foreign institutional investors (FII) since the pandemic began, FII returned to India pumping USD2.5bn in the month of June, the highest in 7 months. The 4QFY20 (March 2020 ending) corporate earnings were impacted given the disruption from the COVID pandemic and the much-awaited earnings recovery has been pushed back at least a year as a result. However, investors are looking beyond FY21, and are likely to favour companies that have high quality balance sheets with strong cash flow generation to survive the current economic downturn.
The views and opinions contained in this document are those of India Avenue Investment Management Australia Pty. Ltd. (IAIM) (ABN 38 604 095 954) & AFSL 478233. Equity Trustees Limited (Equity Trustees) (ABN 46 004 031 298) AFSL 240975, is a subsidiary of EQT Holdings Limited (ABN 22 607 797 615), a publicly listed company on the Australian Securities Exchange (ASX: EQT), is the Responsible Entity of the India Avenue Equity Fund. This document has been prepared to provide you with general information only and does not take into account the investment objectives, financial situation or particular needs of any person. It is not intended to take the place of professional advice and you should not take action on specific issues in reliance on this information. IAIM does not express any view about the accuracy and completeness of information that is not prepared by IAIM and no liability is accepted for any errors it may contain. Past performance should not be taken as an indicator of future performance. You should obtain a copy of the product disclosure statement before making a decision about whether to invest in this product. No part of this material may be copied, duplicated or redistributed without prior written permission of IAIM or Equity Trustees. The user will be held liable for any unauthorised reproduction or circulation of this document, which may give rise to legal proceedings. Information contained here is based on IAIM’s assumptions and can be changed without prior notice. It is not and may not be relied upon in any manner as legal, tax or investment advice or a recommendation or opinion in relation to an IAIM financial product or service, or any other financial product or service. Please consult your advisors, read the relevant offer document and consider whether the relevant financial product or service is appropriate for you before making any investment decision. Investment in securities involves risks and there is no assurance of returns or preservation of capital. Neither IAIM, Equity Trustees, nor any of its related parties, their directors, employees, agents or representatives shall be liable for any damages whether direct or indirect, incidental, special or consequential including lost capital, lost revenue or lost profits that may arise from or in connection with the use of this information.
*Lonsec Disclaimer: The Lonsec Rating (assigned April 2019) presented in this document is published by Lonsec Research Pty Ltd ABN 11 151 658 561 AFSL 421 445. The Rating is limited to “General Advice” (as defined in the Corporations Act 2001 (Cth)) and based solely on consideration of the investment merits of the financial product. Past performance information is for illustrative purposes only and is not indicative of future performance. It is not a recommendation to purchase, sell or hold India Avenue Investment Management Limited’s product, and you should seek independent financial advice before investing in this product. The Rating is subject to change without notice and Lonsec assumes no obligation to update the relevant document following publication. Lonsec receives a fee from the Fund Manager for researching the product using comprehensive and objective criteria. For further information regarding Lonsec’s Ratings methodology, please refer to Lonsec’s website at: http://www.lonsecresearch.com.au/research-solutions/our-ratings
InvestNow News – 17th July – India Avenue Update – 30th June 2020
Fund and Market Commentary: June 2020
The India Avenue Equity Fund (wholesale) rose 4.65% (net) for the month of June 2020, outperforming its benchmark by 1.68%, following the 0.84% outperformance in May. Our approach is to focus on a broader set of Indian companies, not just the ones typically found in Global/Emerging Market funds or Emerging market indices. Despite this approach not being favoured since 2018 (mid and small cap stocks in India have underperformed Nifty 50 by over 50% over this period), we remain confident that our philosophy of building a portfolio from the insights and experience of experts on the ground in India is the best way to play the country’s long-term growth story.
Over the last three months, there has been a change to broader participation outside the top 15 companies by market cap, possibly suggesting we are finally seeing a reversal of the dominance by the index heavy weight names – top 5 of the index is over 40%. We have also seen the Nifty Mid-cap index outperform the Nifty 50 since the start of the year.
After significant outflows from foreign institutional investors (FII) since the pandemic began, FII returned to India pumping USD2.5bn in the month of June, the highest in 7 months. The 4QFY20 (March 2020 ending) corporate earnings were impacted given the disruption from the COVID pandemic and the much-awaited earnings recovery has been pushed back at least a year as a result. However, investors are looking beyond FY21, and are likely to favour companies that have high quality balance sheets with strong cash flow generation to survive the current economic downturn.
The views and opinions contained in this document are those of India Avenue Investment Management Australia Pty. Ltd. (IAIM) (ABN 38 604 095 954) & AFSL 478233. Equity Trustees Limited (Equity Trustees) (ABN 46 004 031 298) AFSL 240975, is a subsidiary of EQT Holdings Limited (ABN 22 607 797 615), a publicly listed company on the Australian Securities Exchange (ASX: EQT), is the Responsible Entity of the India Avenue Equity Fund. This document has been prepared to provide you with general information only and does not take into account the investment objectives, financial situation or particular needs of any person. It is not intended to take the place of professional advice and you should not take action on specific issues in reliance on this information. IAIM does not express any view about the accuracy and completeness of information that is not prepared by IAIM and no liability is accepted for any errors it may contain. Past performance should not be taken as an indicator of future performance. You should obtain a copy of the product disclosure statement before making a decision about whether to invest in this product. No part of this material may be copied, duplicated or redistributed without prior written permission of IAIM or Equity Trustees. The user will be held liable for any unauthorised reproduction or circulation of this document, which may give rise to legal proceedings. Information contained here is based on IAIM’s assumptions and can be changed without prior notice. It is not and may not be relied upon in any manner as legal, tax or investment advice or a recommendation or opinion in relation to an IAIM financial product or service, or any other financial product or service. Please consult your advisors, read the relevant offer document and consider whether the relevant financial product or service is appropriate for you before making any investment decision. Investment in securities involves risks and there is no assurance of returns or preservation of capital. Neither IAIM, Equity Trustees, nor any of its related parties, their directors, employees, agents or representatives shall be liable for any damages whether direct or indirect, incidental, special or consequential including lost capital, lost revenue or lost profits that may arise from or in connection with the use of this information.
*Lonsec Disclaimer: The Lonsec Rating (assigned April 2019) presented in this document is published by Lonsec Research Pty Ltd ABN 11 151 658 561 AFSL 421 445. The Rating is limited to “General Advice” (as defined in the Corporations Act 2001 (Cth)) and based solely on consideration of the investment merits of the financial product. Past performance information is for illustrative purposes only and is not indicative of future performance. It is not a recommendation to purchase, sell or hold India Avenue Investment Management Limited’s product, and you should seek independent financial advice before investing in this product. The Rating is subject to change without notice and Lonsec assumes no obligation to update the relevant document following publication. Lonsec receives a fee from the Fund Manager for researching the product using comprehensive and objective criteria. For further information regarding Lonsec’s Ratings methodology, please refer to Lonsec’s website at: http://www.lonsecresearch.com.au/research-solutions/our-ratings
