Take the spice route to India but don't end up getting burnt

Grab just a small piece of the action in a land where instability shadows success. Angelique Ruzicka reports

India is a success story, boasting one of the fastest-growing economies in the world – from $32bn (£16bn) at the beginning of the 1980s to more than $1 trillion today. "One of the biggest drivers of growth is the changing demographics," says Arun Mehra, head of investment strategy at Fidelity's India Focus fund. "Wealth is increasingly filtering down to rural and traditionally low-income sections of society."

The boom shows no sign of stalling. "The long-term outlook is very positive. India is changing and new industries are emerging all the time," adds Mr Mehra.

So how can investors tap into this success to boost their wealth?

The Bombay Stock Exchange (BSE), which hasn't followed the change in the city's name to Mumbai, has bureaucratic restrictions that in effect bar small private investors from buying Indian company shares off their own bat. Instead, there are two types of unit or investment trust that can give you exposure to India. First are those that put 100 per cent of investors' money into the subcontinent.

Sean Scahill at financial adviser The Fisher Organisation recommends the F&C India Investment Company and the HSBC Indian Equity Fund, which have returned 60.79 and 44.85 per cent respectively so far this year. Other top performers over the past 12 months include AIG Equity, Invesco Equity and CAAM Funds India.

Alternatively, if you want to invest in India and gain exposure to other emerging markets around the world at the same time, you can invest in a Bric (Brazil, Russia, India, China) fund. This will also help to spread your risk.

"One of our top sellers right now is Allianz Bric All Stars, up 52 per cent in the year to date. This is a high-risk fund that currently invests 23 per cent of its portfolio in India," says Rebecca O'Keefe, head of fund management at financial website Interactive Investor.

An increasingly popular alternative to buying into a unit or investment trust is to purchase shares in an exchange-traded fund (ETF), which allows the investor to track the movements of a particular stock market, such as the FTSE or the BSE on the subcontinent. Several ETFs are quoted on the London Stock Exchange – Lyxor ETF India, for example – and can therefore be bought from a UK stockbroker.

Be warned, though, that the Indian stock market is far more volatile than the US or UK markets, so an ETF that tracks its movements is also prone to sharp upward and downward swings. "In mid-August, the BSE corrected to 14,000 points after having reached a high of 19,000 in July. It is substantially higher than 19,000 now," says Pinakin Patel, portfolio manager of the JPMorgan Indian Investment Trust.

With such volatility, financial advisers urge caution. "This is a market for serious investors, not 'widows and orphans'. And even for serious investors, I wouldn't recommend investing any more than 10 per cent of a portfolio in India," says Mr Scahill.

Remember, India is still prone to social and political instability. "As with any emerging market, the risks are high – but India appears more volatile than most," says Ms O'Keefe.

"There is undoubtedly potential but it is a question of being brave."

Independent Partners; Do you need financial advice on your investments, pension or insurance? Book a free consultation with an independent Financial Adviser at VouchedFor.co.uk

Finacial products from our partners
Property search
  • Get to the point
Latest stories from i100
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

    Recruitment Genius: Claims Administrator

    £16000 - £18500 per annum: Recruitment Genius: This is an excellent opportunit...

    Recruitment Genius: Senior SEO Executive

    £24000 - £28000 per annum: Recruitment Genius: A Senior SEO Executive is requi...

    Recruitment Genius: Online Customer Service Administrator

    £16000 - £18000 per annum: Recruitment Genius: An Online customer Service Admi...

    Recruitment Genius: Digital Marketing Executive

    £18000 - £22000 per annum: Recruitment Genius: This global, industry leading, ...

    Day In a Page

    'It was first time I had ever tasted chocolate. I kept a piece, and when Amsterdam was liberated, I gave it to the first Allied soldier I saw'

    Bread from heaven

    Dutch survivors thank RAF for World War II drop that saved millions
    Britain will be 'run for the wealthy and powerful' if Tories retain power - Labour

    How 'the Axe' helped Labour

    UK will be 'run for the wealthy and powerful' if Tories retain power
    Rare and exclusive video shows the horrific price paid by activists for challenging the rule of jihadist extremists in Syria

    The price to be paid for challenging the rule of extremists

    A revolution now 'consuming its own children'
    Welcome to the world of Megagames

    Welcome to the world of Megagames

    300 players take part in Watch the Skies! board game in London
    'Nymphomaniac' actress reveals what it was really like to star in one of the most explicit films ever

    Charlotte Gainsbourg on 'Nymphomaniac'

    Starring in one of the most explicit films ever
    Robert Fisk in Abu Dhabi: The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers

    Robert Fisk in Abu Dhabi

    The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers
    Vince Cable interview: Charging fees for employment tribunals was 'a very bad move'

    Vince Cable exclusive interview

    Charging fees for employment tribunals was 'a very bad move'
    Iwan Rheon interview: Game of Thrones star returns to his Welsh roots to record debut album

    Iwan Rheon is returning to his Welsh roots

    Rheon is best known for his role as the Bastard of Bolton. It's gruelling playing a sadistic torturer, he tells Craig McLean, but it hasn't stopped him recording an album of Welsh psychedelia
    Russell Brand's interview with Ed Miliband has got everyone talking about The Trews

    Everyone is talking about The Trews

    Russell Brand's 'true news' videos attract millions of viewers. But today's 'Milibrand' interview introduced his resolutely amateurish style to a whole new crowd
    Morne Hardenberg interview: Cameraman for BBC's upcoming show Shark on filming the ocean's most dangerous predator

    It's time for my close-up

    Meet the man who films great whites for a living
    Increasing numbers of homeless people in America keep their mobile phones on the streets

    Homeless people keep mobile phones

    A homeless person with a smartphone is a common sight in the US. And that's creating a network where the 'hobo' community can share information - and fight stigma - like never before
    'Queer saint' Peter Watson left his mark on British culture by bankrolling artworld giants

    'Queer saint' who bankrolled artworld giants

    British culture owes a huge debt to Peter Watson, says Michael Prodger
    Pushkin Prizes: Unusual exchange programme aims to bring countries together through culture

    Pushkin Prizes brings countries together

    Ten Scottish schoolchildren and their Russian peers attended a creative writing workshop in the Highlands this week
    14 best kids' hoodies

    14 best kids' hoodies

    Don't get caught out by that wind on the beach. Zip them up in a lightweight top to see them through summer to autumn
    Robert Fisk in Abu Dhabi: The acceptable face of the Emirates

    The acceptable face of the Emirates

    Has Abu Dhabi found a way to blend petrodollars with principles, asks Robert Fisk