Mark Dampier: Reliance fund opens up a new passage to India

The Analyst

Few investors would recognise the name Insynergy, but I'm sure it won't be long before it becomes well known. They are a relatively new fund management business offering UK retail investors access to experienced and talented fund managers, whose skills have previously only been available outside the UK or to institutions.

As the name suggests, this fund focuses on Indian equities. It is headed by Ashish Mehta of Reliance Asset Management, who has over 15 years' experience in this area. Those who know anything about Reliance will be aware it is one of the largest companies in India, covering a diverse range of activities, with financial services being just one element to the business.

The Indian growth story has been somewhat eclipsed by that of rival China. It is fair to say China's development is a number of years ahead, but I think India is probably the more interesting story for the next 25 years. A large part of this relates to population trends, which give it a demographic edge over China and most other Asian countries.

Of the Indian population, 65 per cent is aged under 35 and half of these under 25. Why is this is important? Because it is younger generations that tend to drive growth forward, especially when they are well educated. The Chinese, on the other hand, are projected to suffer a Western-style aging population over the coming decades, which may explain why they are in such in a rush to get things done.

India, like China, offers a long list of mind-boggling facts, which are even more impressive when compared with more mature economies such as the UK or America. India plans to spend $250bn over the next two years on infrastructure and $1.3 trillion over seven years. Huge investment has already been made into power generation with new plants coming on-stream far quicker than expected. India might have experienced some problems in building infrastructure for the Commonwealth Games, but it could still teach the UK some lessons in planning. The needs are pressing, though. Scarcely 50 per cent of the roads are paved and pre-planned power shut-offs are a daily occurrence in second- and third-tier cities. The rural population, meanwhile, typically receives only 8 to 10 hours of electricity a day.

India's infrastructure drive and burgeoning middle class are providing plenty of investment opportunities, and Reliance believe it is possible to find companies on very attractive valuations that can grow at 20 to 25 per cent each year, implying a doubling of their share prices every three years. However, they aren't blinded by potential and recognise that rapidly growing economies can become overheated.

They are therefore discerning about company valuations and will sell a share that reaches their estimation of fair value, and in this fund they have an additional ability to hedge the portfolio by shorting shares in companies they believe are overpriced. If you are sifting through the market looking for great businesses with good management, you will also come across poor business models, weak management and areas in decline, so this creates extra opportunities the Reliance team can exploit.

With a starting universe of 2,000 stocks, Reliance focus on 400, using intensive company meetings to drill down to a core of approximately 125 companies. Being the size they are, Reliance has an extensive network of business contacts and experts, which help them analyse whole supply chains as well as the main competitors of the companies they hold.

This is a new venture for Reliance, which is dipping its toe in the UK market for the first time. From what I have seen, Reliance's existing funds in India have done extremely well, and I have made a decision to dip my own toe in this fund via my wife's SIPP. The combination of Reliance and one of Asia's best growth stories was enough to tempt me. I shall monitor the fund carefully over the next few months and look to cover it again in six or seven months; time.

Mark Dampier is head of research at Hargreaves Lansdown, the asset manager, financial adviser and stockbroker. For more details about the funds included in this column, visit www.h-l.co.uk/independent

PROMOTED VIDEO
News
business
News
Mick Jagger performing at Glastonbury
people
Life and Style
beautyBelgian fan lands L'Oreal campaign after being spotted at World Cup
Sport
Germany's Andre Greipel crosses the finish line to win the sixth stage of the Tour de France cycling race over 194 kilometers (120.5 miles) with start in Arras and finish in Reims, France
tour de franceGerman champion achieves sixth Tour stage win in Reims
Extras
indybest
Arts and Entertainment
Characters in the new series are based on real people, say its creators, unlike Arya and Clegane the Dog in ‘Game of Thrones’
tv'The Last Kingdom' is based on historical events
Finacial products from our partners
Property search
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    2 x Risk Analysts Required - SAS - Banking

    competitive: Progressive Recruitment: A world leading banking organisation are...

    Brady Business Analyst - Syseca - (EBIS / EDIS) - London

    £500 - £1000 per day: Harrington Starr: Harrington Starr are urgently recruiti...

    Systems Accountant

    £75000 - £100000 per annum: Cameron Kennedy Recruitment: We urgently require f...

    Investment Banking Sales Manager

    £40000 - £50000 per annum + competitive package: Orgtel: Investment Banking Sa...

    Day In a Page

    The true Gaza back-story that the Israelis aren’t telling this week

    The true Gaza back-story that the Israelis aren’t telling this week

    A future Palestine state will have no borders and be an enclave within Israel, surrounded on all sides by Israeli-held territory, says Robert Fisk
    A History of the First World War in 100 Moments: The German people demand an end to the fighting

    A History of the First World War in 100 Moments

    The German people demand an end to the fighting
    New play by Oscar Wilde's grandson reveals what the Irish wit said at his trials

    New play reveals what Oscar Wilde said at trials

    For a century, what Wilde actually said at his trials was a mystery. But the recent discovery of shorthand notes changed that. Now his grandson Merlin Holland has turned them into a play
    Can scientists save the world's sea life from

    Can scientists save our sea life?

    By the end of the century, the only living things left in our oceans could be plankton and jellyfish. Alex Renton meets the scientists who are trying to turn the tide
    Richard III, Trafalgar Studios, review: Martin Freeman gives highly intelligent performance

    Richard III review

    Martin Freeman’s psychotic monarch is big on mockery but wanting in malice
    Hollywood targets Asian audiences as US films enjoy record-breaking run at Chinese box office

    Hollywood targets Asian audiences

    The world's second biggest movie market is fast becoming the Hollywood studios' most crucial
    Grindr founder Joel Simkhai: 'I've found love on my dating app - and my mum keeps trying to hook me up!'

    Grindr founder Joel Simkhai: 'I've found love on my dating app'

    Five years on from its launch and Grindr is the world's most popular dating app for gay men. Its founder Joel Simkhai answers his critics, describes his isolation as a child
    Autocorrect has its uses but it can go rogue with embarrassing results - so is it time to ditch it?

    Is it time to ditch autocorrect?

    Matthew J X Malady persuaded friends to message manually instead, but failed to factor in fat fingers and drunk texting
    10 best girls' summer dresses

    Frock chick: 10 best girls' summer dresses

    Get them ready for the holidays with these cool and pretty options 
    Westminster’s dark secret: Adultery, homosexuality, sadomasochism and abuse of children were all seemingly lumped together

    Westminster’s dark secret

    Adultery, homosexuality, sadomasochism and abuse of children were all seemingly lumped together
    A History of the First World War in 100 Moments: Dulce et decorum est - a life cut short for a poet whose work achieved immortality

    A History of the First World War in 100 Moments

    Dulce et decorum est: a life cut short for a poet whose work achieved immortality
    Google tells popular music website to censor album cover art in 'sexually explicit content' ban

    Naked censorship?

    The strange case of Google, the music website and the nudity take-down requests
    Howzat! 8 best cricket bats

    Howzat! 8 best cricket bats

    As England take on India at Trent Bridge, here is our pick of the high-performing bats to help you up your run-count this summer 
    Brazil vs Germany World Cup 2014 comment: David Luiz falls from leader figure to symbol of national humiliation

    David Luiz falls from leader figure to symbol of national humiliation

    Captain appears to give up as shocking 7-1 World Cup semi-final defeat threatens ramifications in Brazil