Medha Samant
 

Why India, why now?

India is very attractively placed in today’s low growth environment. “It is the only major key economy which is growing at approximately 6 - 7%, especially in the emerging markets universe” says Medha Samant, Investment Director of the Fidelity India Fund states. The growth in India is being driven by domestic forces such as attractive demographics, rising incomes and an elevated middle class. 

Aiding this recovery is the ongoing reforms process that has been in place over the last two to three years ensuring that India in a very strong position from a macro perspective. And from a monetary policy perspective, interest rates have been on their way down, and this is likely to benefit companies in India when it comes to kick-starting the private capital expenditure cycle.   

What sectors look attractive?

From a portfolio perspective, we really like companies in sectors such as consumer staples, consumer discretionary & financials due to them benefiting from the attractive demographics, rising incomes and growing middle class. We also hold some select utilities companies that are monopolistic in nature, ensuring a higher rate of return. Infrastructure names are also positioned well due to them being beneficiaries of government reforms going ahead. 

A key high conviction stock in the portfolio

One of our key high conviction bets has been a company called HDFC Bank. It is India’s leading private sector bank and we have held it over the long-term in the Fidelity India Fund.  It has got a very high quality management team that has been in place right since its inception. This, alongside its well capitalised balance sheet and best-in-class asset quality, makes it one of our biggest contributors to performance. 

HDFC Bank is proactively investing in its Fintech platform which is an area where we are seeing disruption in financial services. It has been continuously taking market share from its public sector rivals and is a long term compounder that has done well for us in both up and down markets. 

Can investors access income in India? 

The Indian dividend yield at 1.5% is definitely not the highest in the Asia ex-Japan region, however when you lift the hood of India what this market provides investors is an opportunity to invest in a high growth story. Some Indian companies are high quality with above average high ROE relative to the rest of the region. 

We also have total return names selectively in the portfolio. These total return companies are where we are seeking capital appreciation as well as some kind of dividend payout or yield. Examples of these companies are really in the utilities sector, where you do get high regulated rates of returns as well as a decent dividend payout. 

 

Investments in overseas markets can be affected by currency exchange and this may affect the value of your investment. Investments in small and emerging markets can be more volatile than investments in developed markets.

This document is issued by FIL Responsible Entity (Australia) Limited ABN 33 148 059 009, AFSL No. 409340 (“Fidelity Australia”).  Fidelity Australia is a member of the FIL Limited group of companies commonly known as Fidelity International.

Investments in overseas markets can be affected by currency exchange and this may affect the value of your investment. Investments in small and emerging markets can be more volatile than investments in developed markets.

This document is intended for use by advisers and wholesale investors. Retail investors should not rely on any information in this document without first seeking advice from their financial adviser. This document has been prepared without taking into account your objectives, financial situation or needs. You should consider these matters before acting on the information.  You should also consider the relevant Product Disclosure Statements (“PDS”) for any Fidelity Australia product mentioned in this document before making any decision about whether to acquire the product. The PDS can be obtained by contacting Fidelity Australia on 1800 119 270 or by downloading it from our website at www.fidelity.com.au. This document may include general commentary on market activity, sector trends or other broad-based economic or political conditions that should not be taken as investment advice. Information stated herein about specific securities is subject to change. Any reference to specific securities should not be taken as a recommendation to buy, sell or hold these securities. While the information contained in this document has been prepared with reasonable care, no responsibility or liability is accepted for any errors or omissions or misstatements however caused. This document is intended as general information only. The document may not be reproduced or transmitted without prior written permission of Fidelity Australia. The issuer of Fidelity’s managed investment schemes is FIL Responsible Entity (Australia) Limited ABN 33 148 059 009. Reference to ($) are in Australian dollars unless stated otherwise. 

© 2017 FIL Responsible Entity (Australia) Limited. Fidelity, Fidelity International and the Fidelity International logo and F symbol are trademarks of FIL Limited.

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