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Katy explores……..Jupiter India Fund

Fund in the spotlight by Katy Owen

At Thomas and Thomas we thrive on the task of finding funds for our portfolios which offer the best opportunity for growth with an appropriate level of risk.

To achieve this, we work on a strategy known as a ‘top-down’ approach. This means that we firstly consider the correct asset allocation (or sectors) and then conduct arduous research to select the most promising funds within that sector which we then blend together to build a portfolio that is appropriate to our individual clients requirements.

Our long-term investment approach means that we do not entertain the idea of a ‘fad’ investment. However, after months of research we believed that the India story was no fad. Out of all of the G20 countries, India is forecast to become the fastest growing economy in2017 and is predicted to have the 5th largest GDP (Gross Domestic Product) on a worldwide economic scale.

This economic boom has not happened overnight. India has been on a twenty-five year journey to embrace globalization and market forces. An example of this lies within India’s digital and technology sector. This industry grew from around $2.5 billion in the late ‘90s to more than $110 billion today. This sector alone has created almost 50 percent of all jobs in the past five years in India.

Career opportunities like this, mean that young and educated Indian people are choosing to stay in India. Some 65% of India’s 1.25 billion population is currently under the age of 35 with half its population under 25.

Economic growth in India has powered a rising middle class that is expected to more than triple to 89 million households by 2025. Other areas of high growth in India can be found within Infrastructure, Engineering and Banking, just to name a few. It was this kind of data that made India compare favourably with other ‘Specialist’ fund options.

In September 2016, our quantitative and qualitative research led us to select the Jupiter India fund for our higher risk ‘Proactive’ client portfolios. We had to remove a fund to include it and so we removed another specialist holding – the AXA Framlington Health fund. This was a fairly brave move as the AXA Health fund had been performing very well historically.

Since then the India fund has enjoyed very pleasing growth of around 20%*. The AXA Framlington Health fund also grew in fairness – but by around 7%* as a comparison during the same time period. As a ‘specialist’ investment, we felt that the Jupiter India fund suited our higher risk portfolios perfectly. This is because it is still very volatile.

An example of this volatility is evident as recently as November 2016, when Prime Minister Narendra Modi stunned the country by declaring all of the country’s 500 and 1000 Rupee bank notes (the most commonly used currency in India) null and void for transactions. The move, aimed at flushing out stacks of cash collected by businessmen and crooked bureaucrats, had driven families to cut back on spending, companies to let go of workers and investors to put projects on hold. The Rupee matters have stabilised over recent months due to the issuance of new ‘clean’ currency and we are happy to report that since November the Jupiter India fund has risen by over 12%**.

On a personal note, there is something rather endearing about India’s economic progress. We may be all too aware of the poverty endured by the people of India, especially within young families and children. It feels good to be supporting investments within a country that is aspiring, and achieving, a positive change in its economy and in turn education and healthcare for future generations to come.

*Financial Express Research date range 01/09/2016 – 11/04/2017

** Financial Express Research date range 06/11/2016 – 11/04/2017

IMPORTANT – this article is not a recommendation to buy one fund. Our ‘spotlight’ articles are intended as information only for existing clients who would like to know a bit more about some of the funds they hold within their wider portfolio. If you would like to discuss this article with us, please don’t hesitate to call.

Katy Owen is our Client Account Manager at Thomas and Thomas


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