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How Spicy Is Your Portfolio?

india avenue logoIndia Avenue Investment Management

Our friends at The Investment Store, a boutique investment fund distributor, have recently been appointed to market India Avenue Investment Management funds in New Zealand.

India Avenue is an Australian investment house dedicated to investing in Indian listed companies and is domiciled in Sydney, with a research affiliate based in Mumbai, India. The India Avenue Equity Fund offers to New Zealand (and Australian) investors an opportunity to create wealth through India’s fast growing economy.

The Indian economy has witnessed a paradigm shift over the last decade. With favourable demographic trends and improving governance, it is currently one of the fastest growing economies in the world and this trend is set to continue over coming decades. This is likely to create significant opportunities for growth by accessing India’s capital markets. For a discussion on the case for Indian equities as part of an investment portfolio, please click through here to a paper entitled "How Spicy is your Portfolio". Or you can read it below.

We think they make some particularly good points on page 2 where they say:

"When it comes to investing for growth, many investors have tried to fit a square peg into a round hole by equating "Emerging markets" (EM) as a proxy for exposure to high growth economies, which in their expectations should result in higher returns. In our view, this naive approach fails for the following reasons:

  1. Research illustrates that high GDP growth doesn’t always equate to high equity returns
  2. The Emerging Market Countries are an eclectic group of countries grouped together to from an Index (MSCI Emerging Markets). These countries share little in common apart from not being classed as Developed
  3. The term EM embraces countries that are big and small, developed and under-developed, industrialised and agrarian, manufacturing and commodity-based and in deficit and surplus
  4. Over 20% of the countries in the EM Index are growing slower than the US!

Hence, it pays to be selective when identifying growth opportunities for a portfolio. An allocation towards developing economies such as India’s is likely to provide a dual benefit of long term capital growth and diversification to high yielding strategies such as Australian/NZ Equities, REIT’s and Fixed Income, which are plentiful in investor portfolios today."

The India Avenue Equity Fund provides exposure to a actively managed portfolio of Indian listed shares not readily accessible by New Zealand investors. Whilst relatively new, the track record of its founders and key staff appears sound.

If are interested in putting a little Indian spice in your portfolio give us a call on 07 578 3863.


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