India Avenue’s focus as a business is to build robust investment solutions that allows Australian and New Zealand based clients to harness the multi-decade India growth story as part of their investment portfolios. For growth investors seeking exposure to companies offshore, India’s demographics offers attractive tailwinds.
As investor we seek to build an investment product that can capitalise on a corporate ecosystem which benefits from India’s superior long-term economic growth (relative to other geographies). We do so by our singular focus on India as an investment region given allows us to build a product which seeks to align itself to India’s growth story, whilst considering all the operational aspects which can minimise cost leakages.
Investment Approach
When investing in Indian equities, it makes sense to consider a “deep approach” rather than just access. India is an inefficient market, which allows active investors to outperform market cap weighted benchmarks like the MSCI India or the Nifty 50. The difference between Global Equity Funds, Emerging Market Funds and Asia Funds seeking to gain exposure to India in sleeves of let’s say 2%, 20% and 25% (reflecting their benchmark weightings), then it likely to be large cap and liquid due to the much larger size of most of these broader mandates. So, by investing in these structures, you tend to be accessing a sleeve of Indian companies who are already large, successful and market leaders in their category – typically this comes at a price. The price of liquidity and being over-researched.
What about single country fund exposure to India? It is our belief that the following is critical from an investment perspective, to deliver long-term success (measured by investment returns).
- An actively managed portfolio which is sectorally, stylistically and stock weighting wise differentiated to the benchmark. These tilts should reflect the macro and industry view of the fund manager, but also a deep understanding of company founders, management, financial management policies and industry positioning and opportunity.
- Co-invest alongside industry experts who have managed money within India’s ecosystem for decades and built a strong track record and a unique style, which is hard to replicate. India Avenue partners with locally based investment advisers in India, who are essentially highly skilled fund managers who have operated successfully in India for many years. These advisers give us “advice” within guidelines, which we implement through our panel of stockbrokers to build a highly active Fund of 65-70 companies.
- Our differentiating factor is our partnerships with these local experts we refer to as our advisers. Their insights, macro, micro and market understanding bring together im combination a well-managed, diverse portfolio.
- Apart from our advisers, India Avenue has a strong network which includes prospective investment advisers, over 5 stockbrokers that we our portfolio through and access to industry experts which we have interacted with along our journey – a legacy our Founders significant experience in this asset class.
Our Operational Expertise
Our Fund has embedded within it, an efficient structure which is based on our experiences. Indian equities cane be an expensive and cumbersome asset class to invest in due higher transaction and custody costs, licensing, capital gains tax, management fees and turnover. Maximising efficiency and minimising costs are an essential requirement in generating robust long-term returns. Our singular focus on Indian equities and our background experience of building foreign investment vehicles to allow investment into Indian equities, play a significant role in our long-term achievements.
Our use of a local custodian over a global custodian provides a significant cost advantage in transaction costs. Global custody costs for transactions are far higher than local custody costs. However, in a Global, EM or Asia Fund you don’t see it as its included with all the other markets where costs may be not as high.
Our Knowledge Difference
As a firm focused on Indian equities, we seek to educate our client base on why the investment could play a role in their overall investment portfolios. To do this we understand that we need an understanding of not only our asset class, but also its fit for client portfolios. Hence our research content (fact sheets, research notes, webinars, media appearances and presentation) all focus on education about India and its equity markets and how to access the story appropriately. We also take 10-20 of our clients with us to India every year on a Grassroots India Tour, which allows them to meet with our advisers, regulators of India’s capital markets, stockbrokers, companies we invest in and industry experts across 3 cities over a week.
Once again, its our singular focus on India that allows us to build something which has been put together with care and insight.uest
