Private Investor: Forget China - now's the time to get stuck into India
Saturday 14 January 2006
It's not often that you open a newspaper and actually feel dizzy when you see a share price. However, that is the sensation that I felt when I last looked at the price of the JPMF Indian Investment Trust.
I'm afraid that I do often bang on about the incredible progress this stock has made for me over the years, and I like to think that I saw the potential of India just a little sooner than most.
It was also a "textbook" investment, in the sense that I did it through a monthly savings plan, thus gaining the advantages of "pound cost averaging" over the long run, and not leaving myself too exposed to what is quite a volatile share. As with most unit trusts, investment trusts and OEICs (open-ended investment companies), investing through such a vehicle, one of the few to offers heavy exposure to the subcontinent, was also more sensible than direct investment, although in the case of India, the opportunities for private investors to do so are nil.
In any case, the shares are close to yet another recent high, at 250p, whereas the last time I mentioned them, before Christmas, they were at 220p or so. When I started investing in them month-by-month a few years ago, I was able to pick them up at 40p or 50p, I seem to recall.
So, now I've built up quite a decent holding that still has fine growth prospects (long term), and it hasn't even cost me that much. As I say, a textbook investment.
Now, however, it seems everyone is catching on to the Indian tale. According to what must be viewed as a slightly self-serving survey carried out by JPMorgan Asset Management (proprietor of JPMF Indian Investment Trust), India has surpassed China as the most popular emerging market among independent financial advisers (IFAs), with 50 per cent saying that it offers excellent investment prospects. But China still rides high in the rankings (38 per cent), only just ahead of the resurgent Eastern European economies (36 per cent). Moreover, despite the current surge in enthusiasm for emerging markets, 39 per cent of IFAs would still only recommend a fund that invests in several emerging markets.
Which is very sound advice. If you haven't got much or you're just starting out at the investment game, a solid base of boring old savings accounts with decent rates of interest and some low-risk, very broadly based collective funds are what you need. However, if you've got some money to which you're quite prepared to wave goodbye if the worst comes to the worst, then do please follow my example and get stuck into India.
I just feel that India has some striking advantages over China in the medium term: rule of law, democracy and the English language being the three most prominent. They may fall behind the Chinese when it comes to manufacturing, but just watch who is making the progress at services - call centres, computer software, films, that sort of thing.
Closer to home, I've topped up on Scottish & Newcastle, since the shares are often talked about as becoming prey to the long- term global trend towards consolidation and concentration in the brewing industry. The latest purchase also averages down the cost of the total holding and ought to be underpinned by a reasonable yield (4.5 per cent), and the seemingly unquenchable thirst of the British for booze. There's even a bit of a play in there on the Russian economy, where lager seems to be usurping vodka as the drink of choice for younger Russians . Investment in emerging markets can sometimes be found in the most surprising places.
Last word, however, goes to that most unusual of investment trusts, 3i. After a lengthy period in the doldrums (when I was buying the shares), it has suddenly burst into life. What can be happening?
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