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
Sunday 25 November 2007
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
- 1 Russell Brand accuses FOX News anchor Sean Hannity of terrorism after aggressive Israel-Gaza debate
- 2 Pope Francis issues top 10 tips for happiness
- 3 Disney heiress Abigail disowns her share of family profits in West Bank company
- 4 The secret report that helps Israel hide facts
- 5 Now diplomacy has failed, boycotting Israel might be the only way we can protect the people of Gaza
The secret report that helps Israel hide facts
Land for gas: Merkel and Putin discussed secret deal could end Ukraine crisis
Woman and two children killed by mob in riots over 'blasphemous' Facebook post in Pakistan
Richard Dawkins tweets: 'Date rape is bad, stranger rape is worse'
Putin is 'thuggish, dishonest and reckless', says British ambassador to US
Boozy, ignorant, intolerant, but very polite – Britain as others see us
- < Previous
- Next >
iJobs Money & Business
£20000 - £24000 per annum: Harrington Starr: A leading provider of web based m...
£28000 - £32000 per annum: Ashdown Group: Secretary (Sales Team Support) - Mat...
Competitive (DOE): Guru Careers: We are looking for an Assistant Management Ac...
£600 - £700 per day + competitive: Orgtel: Senior Investment Accounting Change...
Day In a Page
A two-bedroom flat with boutique hotel-style interiors, close to the foodie haunt of West End Lane
A two-bedroom flat in a beautiful old vicarage, with many original features, close to the city centre
A three-bedroom 16th-century home with an aga kitchen, private gardens and heated outdoor pool, in Hadleigh
A three-bedrom home in sought-after Queen's Gate Mews, with Italian marble-finished bathrooms
Surrounded by glorious countryside in the village of Udimore, sits this impressive four-kiln oast and barn conversion
A five-bedroom house in the picturesque village of Kettlewell, north Yorkshire
An 18th-century former coaching inn with original staircase, open fireplaces and beams throughout
A Grade II-listed Georgian town house with three bedrooms and a south-facing courtyard, near Arundel Castle
Feel on top of the world at this über chic penthouse on the 37th floor of one of Europe’s tallest blocks.
A Grade II-listed Victorian villa with six bedrooms and two further cottages, all with spectacular sea views
A grade II-listed, Georgian cottage with mature 50ft garden, perfect for summer entertaining
A magnificent Georgian pile with turrets, seven bedrooms, a heated pool and four acres of gardens
Fairoak Farm has five bedroom suites, gym, outdoor swimming pool and golf course
Chic two-bedroom river-fronted flat with a private lift that delivers you directly to your home
A spectacular seven-bedroom Tudor pile, once owned by Henry VIII, with 18 acres of land
A seven-bedroom Georgian property previously used as a picturesque wedding venue
A split-level flat in a church conversion with two en suite bedrooms and 1,200sq ft of living space
A three-bedroom bungalow situated behind an impressive stone wall, £645,000
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads
Chapel House is a former vicarage with nine bedrooms in the beautiful Upper Wye Valley
A five-bedroom B&B and separate owner's accomodation with potential for conversion
Enjoy summer by the Thames in this two double-bedroom converted warehouse in Rotherhithe village
A one-bedroom, luxury apartment with private gym and concierge service in Moorgate
A four-bedroom house in Hermitage Gardens with three reception rooms and landscaped gardens
A seven-bedroom Grade II-listed property with a separate self-contained apartment
A five-bedroom Victorian house with three reception rooms and galleried landing, £695,000
A six-bedroom farmhouse with five acres of land in a former cloth-making village
A secluded seven-bedroom detached house with large private garden, £490,000
A three-bedroom cottage overlooking Sarratt village green with open fires and solid oak floors
A three-bedroom maisonette flat in a Grade I-listed, Georgian townhouse in a sought-after location
A one-bedroom apartment located within a private gated development, north of Turnham Green
Look forward to a brighter future at two-bedroom Sunny Cottages, ideal for Londoners looking to downsize
A three-bedroom red-brick cottage with outbuildings and pretty gardens, £200,000
This three-bedroom flat within a former textile factory spans the corner of the fourth floor and has a balcony
A charming four-bedroom Oxfordshire cottage with oak floors and chunky-beamed ceilings, £465,000
A beautiful one-bed flat in a sought-after portered block, with access to Norland Square communal gardens
A one-bedroom flat within a Sixties school conversion with high-spec design and open-plan kitchen, close to Lambeth North Tube, £435,000