This time last year, I was looking forward to seeing my shares in the JP Morgan Fleming Indian Investment Trust doubling again.
This time last year, I was looking forward to seeing my shares in the JP Morgan Fleming Indian Investment Trust doubling again. Well, having started 2003 at 60p and gone to 123p by January 2004, they look like ending 2004 at about 138p - so not quite the performance I might have hoped for. Still, that appreciation of 12 per cent or so is respectable and could have been much worse. After the Indian elections in May, the share crashed to below 100p, at which point many investors were giving up on the Indian dream and heading for the exit.
I managed to keep my nerve, as dramatic ups and downs in emerging markets are really only to be expected, such is the nature of those beasts. Political turbulence goes with the territory, as it were. There is, of course, the old injunction that you should only invest in markets like this if you are prepared to lose all your stake.
Even so, I still have high hopes for India. It is hard to tell whether a specific fund such as the JP Morgan Fleming one is undervalued or fairly valued, because there is little to compare it with, and traditional measures such as net asset value can become a little opaque when dealing with Indian companies. So, some of it is admittedly guesswork.
Some of the edge of that riskiness is taken off (as with all investment) by adopting a regular savings approach and exploiting the benefits of pound cost averaging. That way, your long-term bets should see out the trouble that such investments inevitably fly into.
I've been investing in India for two or three years, and it has been, so far, one of the best moves I've made. Much of what is said about the Indian economy can be written off as hype. It is still an enormously bureaucratic place, there are severe social and religious divisions, and the economy is, obviously, heavily dependent on overseas investment, itself prey to the vagaries and fashions of players in the richer economies of America, Europe and Japan.
Still, I have never heard a convincing refutation of the long-term Indian growth story. We're talking about a population of more than one billion, many of whom are young. Investment, exports, incomes and the economy as a whole have all been growing strongly. Yet the key strengths, to my mind, especially compared with China, are not economic as much as cultural: the English language and democracy.
No wonder that India is finding it so easy to export services and get up to speed in information technology. There are strong home-grown entrepreneurs who are pointing the way to wealth creation. For every dodgy Srichand, Gopichand and Prakash, there is an enterprising Ratan Tata. India is moving gradually away from its old command-style and nationalistic pattern of economic management to a more liberal model.
It is hard to see how the interests of India's poorest have been served by the decades of stagnation that the old ways brought. They - and the well-placed Indian middle class - are likely to benefit from the new jobs and opportunities that international investment and globalisation will bring.
At this time of year, it is right to be charitable, but it is also worth thinking about how your conventional investments can help those who need it most. Few ethical funds, I suspect, make emerging markets a priority, but it is there that the funds are needed most. Why not do your bit to help these economies grow and gain some exposure to potentially very high returns? If not, you can always follow me into the world of the blind man's punt. I haven't added to Urban Dining (stagnating) or Falkland Oil and Gas, but I am tempted to add to Matrix Communications, an IT outfit that is growing very quickly indeed, with news of another potential acquisition coming this week. A prosperous New Year to you.