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Indian equities dominate March’s highest returning funds

01 April 2019

FE Trustnet finds out where the strongest and weakest total returns have been over the past month.

By Gary Jackson,

Editor, FE Trustnet

Emerging markets – especially Indian equities – have just had a strong month as the global rebound from 2018’s challenging conditions continued, data from FE Analytics shows.

During March, the average fund in all 37 of the Investment Association’s peer groups posted a positive total return. This is in contrast to December 2018, when only eight of the sectors made money.

As the table below shows, the strongest peer group return in March came from the IA UK Index Linked Gilts sector, where the average member was up 6.32 per cent.

Baillie Gifford Active Index-Linked Gilt Investment was the highest returning individual member here, up 7.56 per cent, followed by AXA Sterling Index Linked Bond (7.03 per cent) and Threadneedle UK Index Linked (6.94 per cent).

 

Source: FE Analytics

IA Property Other comes next, with First State Asian Property SecuritiesJanus Henderson Horizon Asia-Pacific Property Equities and Janus Henderson Horizon Global Property Equities being the month’s best performers in this sector.

The rest of the list shows how emerging markets, which suffered in 2018 from declining investor sentiment and tighter US monetary policy, continued to rebound this year. IA China/Greater China, IA Asia Pacific Excluding Japan, IA Asia Pacific Including Japan and IA Global Emerging Markets are all in March’s 10 highest returning peer groups.

At the bottom on the table, from a sector point of view, are IA Short Term Money Market (with the average fund up 0.01 per cent), IA Money Market (0.07 per cent), IA UK Direct Property (0.07 per cent), IA North American Smaller Companies (0.19 per cent) and IA Targeted Absolute Return (0.46 per cent).


When we turn to individual funds, FE Analytics data shows just how clear the outperformance of Indian equity funds was in March, with all of the month’s 15 highest returners from the whole Investment Association universe focusing on this part of the market.

Last month, the MSCI India index posted a 10.37 per cent total return (in sterling terms), compared with a gain of 2.35 per cent from the MSCI World and 2.67 per cent from the FTSE All Share. However, Indian equities had lagged many other markets in the first two months of 2019, losing 5.05 per cent in January and falling 1.07 per cent in February.

Investors were put off India at the start of the year because of border skirmishes with Pakistan but returned to the country when these tensions eased. Sentiment is also being bolstered by speculation that the Reserve Bank of India will add to the surprise rate cut it made in February as well as the likelihood that prime minister Narendra Modi’s government will win a second term.

 

Source: FE Analytics

Avinash Vazirani’s $255.7m JGF-Jupiter India Select fund made the highest return of the Investment Association universe last month, after gaining 16.64 per cent. It was closely followed by Vazirani’s £754.4m Jupiter India fund, up 15.75 per cent.

In an update at the start of 2019, the manager offers reasons for his bullish outlook on Indian equities: “The outlook for growth is still positive, with the World Bank recently maintaining its GDP growth forecast for India at 7.3 per cent for [2018] and 7.5 per cent for [2019].

“We think that Indian companies are well positioned for earnings growth, especially now that companies have recovered from significant disruption over the last two years due to de-monetisation and the introduction of the Goods and Services Tax.”


Aside from specialist Indian equity funds, index-linked gilts had a strong month as previously mentioned.

Funds focusing on the Asia-Pacific region, of which Indian is a part, also achieved some good returns. First State All China made 9.74 per cent over the course of March while BMO Pacific Equity and BlackRock GF Asian Dragon – which are both overweight India by a decent margin – appear in the list of the month’s top 30 funds.

FE Analytics reveals that around 3,600 funds in the Investment Association universe made positive returns last month but just under 300 were in negative territory. The 15 funds with the lowest returns can be seen below.

 

Source: FE Analytics

VT Garraway Absolute Equity made the month’s biggest loss after dropping 13.56 per cent. Until very recently, this fund was called City Financial Absolute Equity.

It rebranded after City Financial Investment Company entered administration with this fund and five others transferred to Valu-Trac Investment Management and investment management responsibilities given to Garraway Capital.

The list above also shows that some UK equity strategies were among the worst performers last month including Quilter Investors UK Equity Income II, Standard Life Investments UK Equity Recovery, LF Miton UK Smaller Companies and L&G UK Alpha Trust.

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Data provided by FE fundinfo. Care has been taken to ensure that the information is correct, but FE fundinfo neither warrants, represents nor guarantees the contents of information, nor does it accept any responsibility for errors, inaccuracies, omissions or any inconsistencies herein. Past performance does not predict future performance, it should not be the main or sole reason for making an investment decision. The value of investments and any income from them can fall as well as rise.