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; request a free guide on NISAs from Hargreaves Lansdown

Arts and Entertainment
Sydney and Melbourne are locked in a row over giant milk crates
art
News
Netherlands' goalkeeper Tim Krul fails to make a save from Costa Rica's midfielder Celso Borges during a penalty shoot-out in the quarter-final between Netherlands and Costa Rica during the 2014 FIFA World Cup
newsGoalkeepers suffer from 'gambler’s fallacy' during shoot-outs
News
A scene from the video shows students mock rioting
newsEnd-of-year leaver's YouTube film features playground gun massacre
Travel
travel
PROMOTED VIDEO
Voices
A family sit and enjoy a quiet train journey
voicesForcing us to overhear dull phone conversations is an offensive act
News
i100This Instagram photo does not prove Russian army is in Ukraine
News
Kenny Ireland, pictured in 2010.
peopleActor, from House of Cards and Benidorm, was 68
News
Morrissey pictured in 2013
people
Sport
sportVan Gaal has £500,000 video surveillance system installed to monitor Manchester United players
Environment
View from the Llanberis Track to the mountain lake Llyn
Du’r Arddu
environmentA large chunk of Mount Snowdon, in north Wales, is up for sale
Life and Style
Martha Stewart wrote an opinion column for Time magazine this week titled “Why I Love My Drone”
lifeLifestyle guru Martha Stewart reveals she has flying robot... to take photos of her farm
News
i100
Life and Style
The director of Wall-E Andrew Stanton with Angus MacLane's Lego model
gadgetsDesign made in Pixar animator’s spare time could get retail release
News
peopleGuitarist, who played with Aerosmith, Lou Reed and Alice Cooper among others, was 71
Environment
Tyred out: should fair weather cyclists have a separate slow lane?
environmentFormer Labour minister demands 'pootling lanes' for women cyclists
News
people
Finacial products from our partners
Property search
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

    1st Line Support Technician / Application Support

    £20000 - £24000 per annum: Harrington Starr: A leading provider of web based m...

    Team Secretary - (Client Development/Sales Team) - Wimbledon

    £28000 - £32000 per annum: Ashdown Group: Secretary (Sales Team Support) - Mat...

    Accountant / Assistant Management Accountant

    Competitive (DOE): Guru Careers: We are looking for an Assistant Management Ac...

    Senior Investment Accounting Change Manager

    £600 - £700 per day + competitive: Orgtel: Senior Investment Accounting Change...

    Day In a Page

    Dress the Gaza situation up all you like, but the truth hurts

    Robert Fisk on Gaza conflict

    Dress the situation up all you like, but the truth hurts
    Save the tiger: Tiger, tiger burning less brightly as numbers plummet

    Tiger, tiger burning less brightly

    When William Blake wrote his famous poem there were probably more than 100,000 tigers in the wild. These days they probably number around 3,200
    5 News's Andy Bell retraces his grandfather's steps on the First World War battlefields

    In grandfather's footsteps

    5 News's political editor Andy Bell only knows his grandfather from the compelling diary he kept during WWI. But when he returned to the killing fields where Edwin Vaughan suffered so much, his ancestor came to life
    Lifestyle guru Martha Stewart reveals she has flying robot ... to take photos of her farm

    Martha Stewart has flying robot

    The lifestyle guru used the drone to get a bird's eye view her 153-acre farm in Bedford, New York
    Former Labour minister Meg Hillier has demanded 'pootling lanes' for women cyclists

    Do women cyclists need 'pootling lanes'?

    Simon Usborne (who's more of a hurtler) explains why winning the space race is key to happy riding
    A tale of two presidents: George W Bush downs his paintbrush to pen father’s life story

    A tale of two presidents

    George W Bush downs his paintbrush to pen father’s life story
    Restaurateur Mitch Tonks has given the Great Western Pullman dining car a makeover

    The dining car makes a comeback

    Restaurateur Mitch Tonks has given the Great Western Pullman dining car a makeover
    Gallery rage: How are institutions tackling the discomfort of overcrowding this summer?

    Gallery rage

    How are institutions tackling the discomfort of overcrowding this summer?
    Louis van Gaal has £500,000 video surveillance system installed to monitor Manchester United players

    Eye on the prize

    Louis van Gaal has £500,000 video surveillance system installed to monitor Manchester United players
    Women's rugby: Tamara Taylor adds fuel to the ire in quest to land World Cup

    Women's rugby

    Tamara Taylor adds fuel to the ire in quest to land World Cup
    Save the tiger: The day America’s love of backyard tigers led to a horrific bloodbath

    The day America’s love of backyard tigers led to a horrific bloodbath

    With only six per cent of the US population of these amazing big cats held in zoos, the Zanesville incident in 2011 was inevitable
    Samuel Beckett's biographer reveals secrets of the writer's time as a French Resistance spy

    How Samuel Beckett became a French Resistance spy

    As this year's Samuel Beckett festival opens in Enniskillen, James Knowlson, recalls how the Irish writer risked his life for liberty and narrowly escaped capture by the Gestapo
    We will remember them: relatives still honour those who fought in the Great War

    We will remember them

    Relatives still honour those who fought in the Great War
    Star Wars Episode VII is being shot on film - and now Kodak is launching a last-ditch bid to keep celluloid alive

    Kodak's last-ditch bid to keep celluloid alive

    Director J J Abrams and a few digital refuseniks shoot movies on film. Simon Usborne wonders what the fuss is about
    Once stilted and melodramatic, Hollywood is giving acting in video games a makeover

    Acting in video games gets a makeover

    David Crookes meets two of the genre's most popular voices