29 March 2012
HSBC's Sanjiv Duggal is selling the India growth story to the Middle East - hard and fast. And he is banking on his USD 4 billion India Equity Fund's past performance - an average return of 18% per annum - to entice investors on board.
The HSBC GIF India Equity Fund, which Duggal has been managing since its launch, has given a cumulative return of 1,371% compared to the Bombay Stock Exchange's (BSE) growth of 370% in the past 16 years.
The fund, currently ranking among the largest Indian equity funds globally, offers investors access to one of the largest and fastest growing economies in the world through a well-diversified portfolio of Indian equities. Duggal hopes that Middle Eastern investors looking to diversify will consider adding India to their investment basket.
"India - for the Middle Eastern and GCC investors - will be a key part of diversification. Typically, a lot of people have assets or investments in their home region, so it is always good to diversify their portfolio," he told Zawya.
Although Duggal says it's hard to give a breakdown of investors region-wise, he admits the fund has had investors from the Middle East, including sovereign wealth funds, for some years now.
In 2011, the fund was down 7.5% against the benchmark - primarily due to the fund not buying expensive stocks that performed better. This year to date, however, the fund is performing significantly better. "We are 33% up compared to our peer groups at 20-21%," Duggal said.
Retail investors can buy into the fund with a minimum investment of USD 5,000 (AED 18,350).
Why India?
"India is a big, long-term growth story. It has very different dynamics from this (Middle East) region," Duggal said. "India is already a top 10 market in the world by market cap, the fourth-largest economy in the world on a PPP [purchasing power parity] basis and hence there is big opportunity. By 2020, the size of the economy will grow to three to four times in normal terms throwing up a lot of opportunities and
that is something ME/GCC investors can partake and benefit from."
Whether it's institutional or retail money, Duggal's objective is to keep interest going in India.
"We just want to inform people that India is a good opportunity. There are some challenges, but it is a good place to be invested in."
His cue to the potential of the Indian market is his fund's 18% per annum return. "I won't say it will happen going forward because history and future are different. But it shows you the potential."
Although the Economic Survey 2011-2012 pointed out that subdued inflow of foreign funds had led to a decline in Indian markets with FIIs pulling out as much as INR 2,130 million from the Indian equity market in the April-December 2011 period, Duggal believes that India still offers the window of opportunity.
"I have been investing in India for the longer term... we think it will deliver good returns over time."
BSE bull run?
A number of stock market analysts in India believe the BSE will retest the 20,000 level this year. Although Duggal refrains from commenting on that, he adds that "anything is possible".
"Indian equity typically has been a top three or bottom three performer among the emerging markets. Last year, India was in the bottom three. This year, so far, it is among the top three. In 2009, the index was among the top three, while in 2008 it was in the bottom three. So you can see when India moves, it really moves by big amounts - up or down."
Experts that include HSBC's Frederic Neumann have indicated that investors need to take note of ASEAN economies since India and China are losing their competitive edge.
Duggal said: "When we speak to clients, we see a lot more interest in emerging markets especially for fixed income, debt instruments and equity. A lot of them are looking to focus more on emerging markets and that's where the growth will be in the world. People are rebalancing towards where the growth is."
Stay focussed
The key thing for a fund manager is not to get swayed by sentiment, but stick to his guns. "It is important that you have a process that you follow as a fund manager so that keeps you on the slope. And so you are not deviating and going off track. If you go off track, you will get into trouble.
"India is one of the most challenging markets in terms of running money," Duggal said, adding: "We found out in the last 16 years you need to have a process and clients understand your performance. It is very important to be able to explain good and bad performance."
HSBC's Sanjiv Duggal is selling the India growth story to the Middle East - hard and fast. And he is banking on his USD 4 billion India Equity Fund's past performance - an average return of 18% per annum - to entice investors on board.
The HSBC GIF India Equity Fund, which Duggal has been managing since its launch, has given a cumulative return of 1,371% compared to the Bombay Stock Exchange's (BSE) growth of 370% in the past 16 years.
The fund, currently ranking among the largest Indian equity funds globally, offers investors access to one of the largest and fastest growing economies in the world through a well-diversified portfolio of Indian equities. Duggal hopes that Middle Eastern investors looking to diversify will consider adding India to their investment basket.
"India - for the Middle Eastern and GCC investors - will be a key part of diversification. Typically, a lot of people have assets or investments in their home region, so it is always good to diversify their portfolio," he told Zawya.
Although Duggal says it's hard to give a breakdown of investors region-wise, he admits the fund has had investors from the Middle East, including sovereign wealth funds, for some years now.
In 2011, the fund was down 7.5% against the benchmark - primarily due to the fund not buying expensive stocks that performed better. This year to date, however, the fund is performing significantly better. "We are 33% up compared to our peer groups at 20-21%," Duggal said.
Retail investors can buy into the fund with a minimum investment of USD 5,000 (AED 18,350).
Why India?
"India is a big, long-term growth story. It has very different dynamics from this (Middle East) region," Duggal said. "India is already a top 10 market in the world by market cap, the fourth-largest economy in the world on a PPP [purchasing power parity] basis and hence there is big opportunity. By 2020, the size of the economy will grow to three to four times in normal terms throwing up a lot of opportunities and
that is something ME/GCC investors can partake and benefit from."
Whether it's institutional or retail money, Duggal's objective is to keep interest going in India.
"We just want to inform people that India is a good opportunity. There are some challenges, but it is a good place to be invested in."
His cue to the potential of the Indian market is his fund's 18% per annum return. "I won't say it will happen going forward because history and future are different. But it shows you the potential."
Although the Economic Survey 2011-2012 pointed out that subdued inflow of foreign funds had led to a decline in Indian markets with FIIs pulling out as much as INR 2,130 million from the Indian equity market in the April-December 2011 period, Duggal believes that India still offers the window of opportunity.
"I have been investing in India for the longer term... we think it will deliver good returns over time."
BSE bull run?
A number of stock market analysts in India believe the BSE will retest the 20,000 level this year. Although Duggal refrains from commenting on that, he adds that "anything is possible".
"Indian equity typically has been a top three or bottom three performer among the emerging markets. Last year, India was in the bottom three. This year, so far, it is among the top three. In 2009, the index was among the top three, while in 2008 it was in the bottom three. So you can see when India moves, it really moves by big amounts - up or down."
Experts that include HSBC's Frederic Neumann have indicated that investors need to take note of ASEAN economies since India and China are losing their competitive edge.
Duggal said: "When we speak to clients, we see a lot more interest in emerging markets especially for fixed income, debt instruments and equity. A lot of them are looking to focus more on emerging markets and that's where the growth will be in the world. People are rebalancing towards where the growth is."
Stay focussed
The key thing for a fund manager is not to get swayed by sentiment, but stick to his guns. "It is important that you have a process that you follow as a fund manager so that keeps you on the slope. And so you are not deviating and going off track. If you go off track, you will get into trouble.
"India is one of the most challenging markets in terms of running money," Duggal said, adding: "We found out in the last 16 years you need to have a process and clients understand your performance. It is very important to be able to explain good and bad performance."
© Zawya 2012
