The International Monetary Fund (IMF) recently predicted that India would be the fastest growing major economy in the world by 2016. It has already become evident that investors are starting to look to mutual funds and ETFs with significant Indian holdings in order to take advantage of this growth.
The Indian investment proposition is almost a dichotomy of its neighbour China which has invested heavily in its economic infrastructure. As the Chinese economy slackens in the wake of over-investment the Indian economy is protected (and its growth shielded) by a diversified export market. This environment has served to attract a number of mutual funds, often set up by foreign fund managers, to operate locally resulting in a total Indian Mutual Fund AuM increase of 35% (to US$190 billion) from March 2014 – March 2015.
Ratings agency Fitch suggested that this growth in Indian markets it set to remain robust over the next few years and will be “key in lifting the aggregate regional growth rate, accounting for almost half of the forecast growth for [the Asia Pacific region]” Following the election of a new Indian government in May 2014 and the subsequent bullish economic reform (including the removal of a number of economic barriers such as the retrospective tax law) several sectors in India are now well positioned to develop and prosper. Ratings agency Standard and Poor stated that the new government would “remedy, to varying degrees, the growth impediments-policy paralysis, energy supply bottlenecks, and administrative obstacles… [adding] momentum to the incipient cyclical upswing evident in the economy.” This prediction rings true as the Indian stock market (Sensex) demonstrated an increase of 32% this year, which many believe is a direct result of Prime Minister Narendra Modi’s reforms. Echoing this trend the MSCI India Index is up 30% and Indian region funds reportedly averaged a surge of 2.41% whilst the global average equity mutual fund added 0.4%; Bloomberg data also estimates average corporate earnings for the MSCI India Index to be over 16%.
“At Apex we are increasingly seeing clients chose India as a preferred emerging market due to its predicted GDP growth rate of almost 8% and the beneficial economic reforms rolled out by the current government. Apex has always placed a huge importance on noticing trends on local level effecting global markets. We are in a unique position to react quickly through our global network of offices across 26 countries, including all key domiciles and entry points to India such Mauritius, Singapore and Dubai. Apex utilizes its local expertise to provide clients with the ability to invest in India in a cost effective manner, using the structures preferred by their investors to optimise the amount of capital that can be raised.”
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