Election expectations saw Indian shares rise to to near record highs on Friday May 9 with markets factoring in a BJP victory.
The Bombay Stock Exchange rose more than 2% with hopes of the opposition party earning a majority in the country's elections, which are set to conclude on next week.
Despite the market euphoria, the country still faces several structural issues like the scarcity of housing, the ecological decline and a growing corruption. According to the OECD, India's economic growth is poised to inch up 4.9% in 2014, after a decade low of 4.5% in 2012-13.
Against this backdrop, Citywire Global has looked at best performing Indian equity managers over the last three years.
Out of the 57 managers with a 36 month track record, 25 made money over this period, while 32 underperformed the average manager in the sector, who returned 18.16%
Looking at the most commonly used benchmark in the sector, the MSCI India TR rose 16.2% over the same period. So who stood out? Let’s take a closer look at the handful of managers who returned more than 40% over this timeframe.
3. Mrinal Singh, ICIC Prudential
Three year TR (April 2011-April 2014): 41.99%
Posting the third strongest performance over this period is Citywire AA-rated manager Mrinal Singh, who returned 41.99% over the last three years.
Among the ICIC Prudential Discovery Fund’s top holdings are banks (17.23% of the portfolio), auto ancillaries (9.74%), software and transportation companies (11.92% and 7.16%), according to the February factsheet.
2. Ajay Garg, Birla Sun Life
Three year TR (April 2011-April 2014): 44.34%
Second in the three year rankings is another Citywire AA-rated manager, Ajay Garg of Indian investment group Birla Sun. He has returned 44.34% across two India equity-focused funds, the Birla Sun Life Buy India Fund-Growth and Birla Sun Life MNC Fund-Growth.
Both funds own companies like the financial services company ICRA, the pharmaceutical firm Wyeth, ING Vysna Bank and Bayer CropScience. The funds target companies which will experience growth driven by India’s large population and consumption patterns.
1. David Gait, First State
Three year TR (April 2011-April 2014): 56.62%
Topping the table is Citywire AA-rated David Gait, who also came out on top when Citywire Global undertook similar analysis in December 2012. In this update, Gait returned 56.62% over the last 36 months, which makes him the best performing Indian equity manager in this analysis period.
Gait manages three Indian-focused funds on behalf of First State Investments. The First State Indian Subcontinental fund, launched in 2006, invests in shares of companies based or having operations in India, Pakistan, Sri Lanka or Bangladesh.
Among its top stocks are the Indian consumer goods company Marico (7.8% of the portfolio), IT multinational Tech Mahindra (7.6%), global pharmaceutical firm Dr Reddy’s Laboratories (6%) and India's largest traditional Indian medicine manufacturer Dabur India (5.9%).
The fund, which has a high risk profile, is overweight consumer staples, industrials, materials, and telecoms services, while underweighting energy, financials and IT. Its main allocations are in India (93.1%), followed by Sri Lanka (3%) and Bangladesh (1%).