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Friday, April 6, 2012

Pursue the Explosive Indian Stock Market With Care

The above title is borrowed from an article by William Samuel Rocco of Morningstar published a month back. It was buried in my mailbox and discovered during spring cleaning. Many of this blog’s readers who live outside India may find the information presented in the article useful.

Here is an extract:

Matthews India … has handily outpaced the index and all its peers that existed over the trailing three years and the trailing five years. And it has suffered rather average volatility - for an Indian-stock offering - along the way. Meanwhile, Matthews India is in the hands of a seasoned and skilled management team; the team employs a sound growth strategy that has earned strong long-term results at other single-country funds from Matthews.

Matthews India is clearly a top choice for investors who are seeking a pure India vehicle, … and who have long time horizons. But before climbing aboard, India fans should make sure they understand just how rough it can get for even a superior India-stock offering. Though it held up better than the MSCI India Index and its two rivals that existed at that time, Matthews India still lost 62% in terrible 2008.

Finally, India fans should also bear in mind that there are a few excellent diversified emerging markets and Pacific/Asia ex-Japan funds that provide significant India exposure, considerable upside potential, and a far smoother ride than any pure India vehicle. Oppenheimer Developing Markets (ODMAX) regularly invests around 15% of its assets in India, for example, while Mathews Pacific Tiger (MAPTX), which is co-managed by Sharat Shroff (the lead manager of Matthews India), often devotes a bit more of its assets there. And Virtus Emerging Market Opportunities (HEMZX) frequently invests around one fourth of its assets in India.

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