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This is a financial promotion for The First Sentier India Strategy. This information is for professional clients only in the UK and EEA and elsewhere where lawful. Investing involves certain risks including:

  • The value of investments and any income from them may go down as well as up and are not guaranteed. Investors may get back significantly less than the original amount invested.
  • Currency risk: the strategy invests in assets which are denominated in other currencies; changes in exchange rates will affect the value of the strategy and could create losses. Currency control decisions made by governments could affect the value of the strategy's investments and could cause the strategy to defer or suspend redemptions of its shares. 
  • Indian subcontinent risk: although India has seen rapid economic and structural development, investing there may still involve increased risks of political and governmental intervention, potentially limitations on the allocation of the strategy's capital, and legal, regulatory, economic and other risks including greater liquidity risk, restrictions on investment or transfer of assets, failed/delayed settlement and difficulties valuing securities. 
  • Single country / specific region risk: investing in a single country or specific region may be riskier than investing in a number of different countries or regions. Investing in a larger number of countries or regions helps spread risk.
  • Smaller companies risk: Investments in smaller companies may be riskier and more difficult to buy and sell than investments in larger companies.

For details of the firms issuing this information and any strategies referred to, please see Terms and Conditions and Important Information.

For a full description of the terms of investment and the risks please see the Prospectus and Key Investor Information Document for each strategy. 

If you are in any doubt as to the suitability of our funds for your investment needs, please seek investment advice.

Accessing India's growth: why you need more than a GEM strategy

India's economic prowess has become a focal point for institutional investors eyeing long-term growth. Traditionally, investors lean towards Global Emerging Market (GEM) strategies to tap into this opportunity. However, as India’s economy and the listed equity universe has evolved, these universal investment vehicles are likely to become less useful. A more nuanced approach can provide direct exposure to those companies which are at the forefront of India’s transformation.

FSSA, with its team spanning Hong Kong, Singapore, London and Edinburgh, has spent 30 years delving into India’s investment landscape.

A nation braced for change

India is expected to deliver attractive growth and emerge as the world’s third largest economy by 2030. Its allure as an investment destination is underpinned by a large population of aspirational and young consumers. Over half the country’s citizens are under the age of 30, and as the economy formalises and per capita incomes grow, their consumption preferences are changing.

Dominant franchises in sectors such as fast-moving consumer goods (FMCG) are poised to gain market share as the economy becomes more formal and affordability of premium products increases. For example, Colgate-Palmolive (India)1 has been present in the country since 1937 and has a dominant position in India’s oral care industry. Per-capita consumption of toothpaste in India is half of that in other developing countries, and average selling prices are substantially lower as well. We believe consumers will begin to upgrade their products from basic formulas to more premium versions. Given that the Colgate brand has more than a 50% share of the Indian market and strong pricing power, profitability should improve over time. The company also has the opportunity to enter other categories including personal care which forms a large part of the parent company’s product portfolio globally.

With rising per capita incomes, Indian consumers are also spending a larger share of their incomes towards more discretionary products. This is creating opportunities for companies such as Blue Star2, one of the leading air conditioning brands in India. The penetration of air conditioners remains exceptionally low in the country at 7%, compared to over 70% in many other developing countries. With higher incomes, the growth in the air-conditioning industry has strengthened in recent periods. Blue Star has gained market share consistently over the last decade by introducing new variants and expanding its distribution. It also operates a leading portfolio of commercial air-conditioning and refrigeration products which is benefiting from the growing infrastructure development in India. Over the coming decade, we believe the company has the opportunity to grow multi-fold and improve its profitability significantly as it gains operating leverage from its scale.

Indian Subcontinent

Witness the rise of India with a different perspective.

Find out more

Infrastructure development and financial services

However, it’s not only FMCG companies which are poised for growth. Other industries such as infrastructure suppliers, particularly paint and cement companies (for example, Kansai Nerolac India3 and Heidelbergcement4) stand to benefit from the nation's quest for improved quality infrastructure.

Well-managed companies in these industries, boasting high returns and low debt, should thrive as India develops. The spotlight also falls on the financial sector, where private banks are expected to capitalise on the increasing penetration of financial services across the country.

FSSA’s investment in India’s largest private sector bank, HDFC Bank5, is particularly relevant. State-owned banks which still control 60% of India’s banking deposits and loans, are often inefficient and even corrupt. As a result, proficiently managed private banks such as HDFC Bank have expanded their market share significantly over the last two decades and this is likely to continue. The management of HDFC Bank has consistently demonstrated a conservative approach towards managing risks, while sustaining top-tier return on assets (ROAs) through various economic conditions. We believe that HDFC Bank, along with other prominent private financial institutions in India like ICICI Bank6, possesses considerable prospects for growth in the future.

A dedicated strategy offers more opportunities to tap into India’s growth

India, with its diverse economy and vibrant culture, presents a unique set of opportunities for investors. While GEM strategies offer broad exposure to emerging markets, they may not provide the targeted focus needed to navigate the intricacies of India’s dynamic landscape. Despite recent market rallies, India remains a compelling investment destination for an active, bottom-up investor. The nation’s impressive growth, strengthened corporate governance standards and large universe of companies earning high returns on capital contribute to its appeal.

As India’s economy takes centre stage in Asia and emerging markets, FSSA’s strategic approach, which now spans three decades, allows investors to harness this potential growth and navigate the evolving dynamics of the market. For long-term investors, India's demographic and economic factors make it a crucial component of growth-focused portfolios. By moving beyond the limitations of GEM strategies and embracing the nuances of a dedicated India strategy, investors can capitalise on the diverse and promising opportunities India has to offer.

India, with its diverse economy and vibrant culture, presents a unique set of opportunities for investors. 

Source: Company data retrieved from company annual reports or other such investor reports. Financial metrics and valuations are from FactSet and Bloomberg. As at 28 March 2024 or otherwise noted. Portfolio holdings data as at 29 February 2024.

Largest holding in the consumer staples sector
Largest holding in the industrials sector
Largest holding in the materials sector
Largest cement company in the portfolio
Largest holding in the financials sector
Second largest holding in the financials sector

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Important Information

This document has been prepared for informational purposes only and is only intended to provide a summary of the subject matter covered. It does not purport to be comprehensive or to give advice. The views expressed are the views of the writer at the time of issue and may change over time. This is not an offer document and does not constitute an offer, invitation or investment recommendation to distribute or purchase securities, shares, units or other interests or to enter into an investment agreement. No person should rely on the content and/or act on the basis of any material contained in this document.

This document is confidential and must not be copied, reproduced, circulated or transmitted, in whole or in part, and in any form or by any means without our prior written consent. The information contained within this document has been obtained from sources that we believe to be reliable and accurate at the time of issue but no representation or warranty, express or implied, is made as to the fairness, accuracy, or completeness of the information. We do not accept any liability whatsoever for any loss arising directly or indirectly from any use of this document.

References to “we” or “us” are references to First Sentier Investors a member of MUFG, a global financial group. First Sentier Investors includes a number of entities in different jurisdictions. MUFG and its subsidiaries do not guarantee the performance of any investment or entity referred to in this document or the repayment of capital. Any investments referred to are not deposits or other liabilities of MUFG or its subsidiaries, and are subject to investment risk including loss of income and capital invested.

If this document relates to an investment strategy which is available for investment via a UK UCITS but not an EU UCITS fund then that strategy will only be available to EU/EEA investors via a segregated mandate account.

In the United Kingdom, issued by First Sentier Investors (UK) Funds Limited which is authorised and regulated in the UK by the Financial Conduct Authority (registration number 143359). Registered office Finsbury Circus House, 15 Finsbury Circus, London, EC2M 7EB number 2294743. In the EEA, issued by First Sentier Investors (Ireland) Limited which is authorised and regulated in Ireland by the Central Bank of Ireland (registered number C182306) in connection with the activity of receiving and transmitting orders. Registered office: 70 Sir John Rogerson’s Quay, Dublin 2, Ireland number 629188. Outside the UK and the EEA, issued by First Sentier Investors International IM Limited which is authorised and regulated in the UK by the Financial Conduct Authority (registered number 122512). Registered office: 23 St. Andrew Square, Edinburgh, EH2 1BB number SCO79063.

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