Archive for 2025

How one active ETF is tapping into the world’s fastest-growing workforce Discover how this new active fund unlocks growth in a booming economy driven by unique demographics and local market insight. India: Home to 1.4 billion people, with an average age of 29 – an extraordinary demographic figure, particularly compared to the Western world’s ageing population. The stage has been set for a dominant workforce and a significant consumer.  By the end of this decade, 25% of the global workforce will be of Indian origin. Its large and growing stock market is now the fourth largest in the world (only behind the US, China and Japan) with approximately 45% of the market owned by local founders and family structures.  These fascinating stats position the region as an unfolding growth story. But how can we, as investors, harness its potential? I sat down with Mugunthan Siva, co-founder and CIO of boutique investment firm India Avenue, and asked him to tell us more about why a group of ex-ING employees cut loose to use their combined experience and network to focus solely on India as a single investment region. Watch the video to learn more about this emerging market and how India Avenue’s new fund (CBOE: IAEF)  helps investors easily access the region.  Please note, this interview was filmed on 8 April, 2025. Founded in 2015, India Avenue was born from a simple but powerful idea: bring deep insight, experience, and access to one of the world’s most exciting growth markets to Australian and New Zealand investors. “We set up our first fund in 2016… fast forward to today, we manage around $165 million and have just launched an active ETF,” says Siva. Beyond the top 50 on the index While many global and emerging market funds stick to the large caps, India Avenue takes a different path. “The secret to investing in this market is actually finding some of those growth stories further down in the mid and small caps,” Siva explains. Most fund managers focus on the top 50 stocks. But according to Siva, the real opportunity lies in the next tier, where smaller companies often grow faster than the economy and can offer outsized returns for those willing to dig deeper.  A young and vibrant population, a dominant global workforce One of the most compelling aspects of this region is the sheer scale and youth of the population.  “By the end of this decade, 25% of the global workforce will be of Indian origin,” says Siva. “Even a modest increase in wealth could have a profound impact.” This demographic wave underpins a long-term growth story that touches every sector—from consumer goods to healthcare to financial services. A local lens as leverage India Avenue’s investment strategy is underpinned by local expertise and relationships, something Siva believes is non-negotiable when it comes to accessing this market effectively. “You can only get this exposure through building a strong network on the ground,” he says. The firm has built a dual presence, with a team in Australia to tell the story to local investors, and deep connections in India that include local asset managers, brokers, regulators, and company executives. This network enables them to filter 6,000 listed companies down to a curated portfolio of around 70 names. Managing the risks Investing in a single emerging market does come with its own set of risks – currency volatility, political uncertainty, regulatory complexity, and corporate governance, to name a few. But Siva argues that these risks can be mitigated through knowledge and strong local relationships. “You really need to have a deep understanding of the business ethics… whether they want to grow the business or just fill their pockets,” he notes. Their due diligence goes beyond financials; engaging with peers, suppliers, consumers, and employees to form a comprehensive view of each business.  Portfolio positioning For investors wondering where this fits into their overall strategy, Siva is clear: this is a growth-focused, long-term allocation best suited for wealth accumulation. “It’s not really an income-producing or high-yielding asset—it’s more about capital gains,” he explains. Given its low correlation with the Australian market and a different currency exposure, it can also offer diversification benefits to a traditional portfolio.  For more information, visit the India Avenue fund page on their website, or on Cboe.  India Avenue’s Active ETF gives investors an easy and convenient way to harness India’s growth story, with exposure to 60-80 companies listed on Indian stock exchanges, in one listed security. Click Here To Read The Complete Article

Capitalising on India (Part I) India’s growth story is only mid to early cycle. Playing it the right way will make a significant impact to portfolios. The Best Way to Invest in India India, as the fourth-largest financial market and one of the world’s fastest-growing economies, presents an undeniably compelling opportunity for investors. To fully capitalise on this growth story, it is essential to strategically invest in Indian stocks to maximise returns.  We propose that three critical factors can guide investors in achieving this objective effectively. In this note, we discuss the first of the key factors. Stay Invested: Structural Over Tactical To evaluate the performance of staying invested versus tactical trading in the Indian stock market, we analysed the contrasting approaches of the two primary investor groups: foreign and domestic investors. Foreign investors, including Foreign Institutional Investors (FIIs) and Foreign Portfolio Investors (FPIs), have historically favoured a tactical approach over a structural one in India. This strategy has often led to missed opportunities in this high-growth market, as their activities primarily revolve around short-term tactical beta plays rather than long-term commitments to structural allocations. Typically, EM and Asia Funds (a large component of FII//FPI investors) tend to play India more tactically, switching between over and underweight. In contrast, Domestic Institutional Investors (DIIs) in India have evolved into “rupee cost averaging” through monthly investment plans via their local mutual fund. In CY2024 alone, local investors invested over US$60bn, into their own market! By studying the timing and impact of FII entries and exits and comparing their strategies with those of DIIs, we aim to highlight key differences. Using historical data on allocations and the performance of the Nifty 50 index, we assess how effectively FII strategies leverage—or stray from—market opportunities. Nifty Performance vs FII and DII Net Allocation Period Net Flows and Subsequent Performance Period FII Allocation A$bn DII Allocation A$bn Subsequent 12m Performance 1. Feb20 – Apr20 -15.5 13.3 69% 2. Feb22 – Jun22 -25.6 22.5 16% 3. Dec22 – Apr23 -9.4 15.4 34% 4. Aug23 – Dec23 -9.9 11.6 11% (YTD) Source: Motilal Oswal (Bulls & Bears), NSE, data as of 31/10/2024 FII’s often reduce their exposure during market downturns, frequently missing out on the recovery gains that follow. In contrast, DIIs tend to increase their allocations during these periods, providing market stability. Historical data highlights that during significant market declines, DII inflows typically counterbalance FII outflows, with the Nifty 50 index often rebounding thereafter. However, FIIs commonly re-enter at higher market levels, reflecting suboptimal timing and forfeiting substantial gains from post-recovery rallies. This pattern underscores the advantages of adopting a structural, long-term allocation strategy over a tactical rebalancing approach. A consistent investment strategy, akin to that of domestic investors, allows for better alignment with India’s enduring growth trajectory and the potential for enhanced alpha generation. The compounding benefits of long-term investments play out across market cycles, rewarding those who stay invested. However, behavioural challenges often deter foreign investors from re-entering markets at higher levels after selling, further emphasising the need for a more disciplined, cycle-agnostic approach. Click Here To Read The Complete Article