Ashoka India Equity (AIE)
20/03/2024
Results analysis from Kepler Trust
Intelligence
Ashoka India Equity (AIE) has
released its half-year results for the period ending 31/12/2023.
The trust delivered share price and net asset value (NAV) total
returns of 16.3% and 15.7% respectively over the period, both in
sterling terms. Equivalent returns for the trust's benchmark, the
MSCI India IMI Index, were 16.4%.
Despite being flat on the
benchmark over the half-year, AIE delivered strong outperformance
over 2023 as a whole, with NAV total returns of 24.5%, compared to
18.4% in the benchmark. Since inception in 2018 through to the end
of February 2024, the trust delivered annualised NAV total returns
of 18.1%, compared to 12.8% for the benchmark.
Chairman Andrew Watkins said:
"Both Acorn and White Oak remain focused on delivering outstanding
returns from a broadly diversified portfolio of investments from
across the market cap spectrum. Your board has great confidence in
their abilities to outperform and produce superior returns from one
of the world's most dynamic and fastest-growing
markets."
Kepler View
Ashoka India Equity (AIE) has
been the best-performing India specialist trust since its launch in
2018. The trust has the largest in-country research team in the
sector. The managers place a heavy emphasis on corporate governance
and valuations, with the latter backed by a proprietary cash-flow
centric valuation framework.
India's stock market has had
a strong few years, with multiple tailwinds for the country.
Firstly, it has been relatively more immune to a strengthening
dollar than in the past. There has also been a substantial build-up
of foreign reserves, and its economy was not subject to the same
sort of inflationary shocks that affected the developed countries
in 2022.
Secondly, economic growth has
also been strong. India's GDP grew by 7.3% last year, making it the
fastest-growing major economy in the world. That is partly driven
by rising exports, as companies shift away from China not only due
to political risks but also for economic reasons - Indian labour
force is not only cheaper but also younger and still growing in
size.
AIE has a near six-year track
record of taking advantage of these opportunities, delivering
strong outperformance in the process. Although there have been some
arguments that the Indian stock market is overheated, we believe
the AIE team has shown great aptitude in sorting the wheat from the
chaff. They are valuation-conscious and aim to not buy at higher
valuations unless the growth opportunity is there. The team also
places a heavy emphasis on corporate governance, which has helped
them avoid some poor performers in the last couple of
years.
Of course, there are no
guarantees that this rosy picture will continue indefinitely.
Nonetheless, the wider macroeconomic picture remains positive for
India and the country's stock market continues to deliver solid
earnings growth. We think AIE remains an attractive vehicle to take
advantage of these opportunities.
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