HSBC GIF India Equity Fund celebrates 15 year anniversary
The HSBC GIF India Equity fund celebrates its 15-year anniversary with a return of more than 1,700% and the top position within its peer group's performance league tables.
Launched in March 1996, the HSBC GIF India Equity fund has returned 1,718% since inception, compared to the Morningstar sector average of 889%, and 450% from its benchmark, the S&P IFC Investable India index for the same period.
This represents an annualised return of 21.33%, compared to a sector average of 16% and benchmark return of 12% over the same period. Past performance is not a guide to future performance.
HSBC GIF India Equity, a flagship fund in HSBC Global Asset Management's emerging market fund range, is the world's largest India equity fund at approximately USD6bn (as at end March 2011). The lead manager, Sanjiv Duggal, has been involved in managing the fund since joining the firm in April 1996.
Bill Maldonado, Chief Investment Officer, Equities, for HSBC Global Asset Management, says although investing in emerging markets may only have become fashionable in recent years, the longevity of the HSBC GIF India Equity fund is testimony to HSBC Global Asset Management's early and ongoing belief in the investment potential of the developing world.
Maldonado said: "The global economy is continuously rebalancing toward the emerging markets and HSBC has been early to capture this trend by launching several key emerging market funds, including HSBC GIF India Equity, many years ago. The India fund in particular has been a major success in terms of performance and assets raised. Our commitment to emerging markets started early, and we continue to build a comprehensive and innovative suite of emerging market products and solutions that enjoy global demand."
HSBC Global Asset Management is now one of the world's largest managers of emerging market assets, with approximately USD145bn assets under management in this asset class. The focus on emerging markets assets remains at the heart of HSBC Global Asset Management's business strategy, Maldonado confirmed.
The 15-year anniversary of the India fund coincides with a recent correction in the Indian equity market, which according to Duggal, means valuations are supportive for long-term investors. Indian equities have fallen by around 15% in the first two months of 2011, followed by a smart bounce back in March of about 10%. Valuations are still below the 5-year average for the 12-month price/earnings multiple, a key measure of valuation.
Duggal said: "We believe the risk/reward ratio when investing in a growth economy like India is attractive for long-term investors and in our view, a ‘must-have' allocation within a growth-oriented portfolio. India is likely to be one of the fastest growing economies in the world in the decade to year 2020, expanding by three or four times in size in nominal terms. This should present many ongoing investment opportunities in the India equity market."
He said that the recently announced 2012 budget had many positive elements. In particular, the government will implement measures to boost manufacturing as a percentage of GDP and improve infrastructure, which Duggal says is critical in facilitating India's growth.
Duggal said one of the main concerns however is inflation, driven by external factors such as high oil prices and high global commodity prices and domestic factors such as changing food consumption patterns. In its recent budget the Government forecast 9% growth in real GDP (+/-0.25%), and 14% nominal GDP growth. Duggal believes this number is possible though the combination may be closer to 7.5-8.0% real GDP growth and 7% inflation.
"Although India will remain a volatile market, there are many factors supporting our long-term optimism - a young and educated population (with people under 25 years making up 50% of the country), thriving consumer demand and strong economic growth," Duggal concluded.