Chikara Indian Subcontinent
Chikara Indian Subcontinent is a high-conviction, concentrated, index-agnostic equity fund. The team are focused on high-quality, mid and large-cap companies which are benefitting from the domestic Indian growth story. They seek businesses operating in structurally growing sectors, led by strong management teams which act in the best interests of shareholders.
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Andy Draycott, Manager Andy Draycott has been with Chikara Investments LLP (Chikara) since 2008, initially working on the CC Asia Alpha fund and the Chikara Asian Evolution fund from 2010. Prior to Chikara, Andy spent three years in Hong Kong with Macquarie Securities, and before that Merrill Lynch Asia and TT investment Management. Andy was appointed a member of Chikara in 2014.
Andy Draycott, Manager Andy Draycott has been with Chikara Investments LLP (Chikara) since 2008, initially working on the CC Asia Alpha fund and the Chikara Asian Evolution fund from 2010. Prior to Chikara, Andy spent three years in Hong Kong with Macquarie Securities, and before that Merrill Lynch Asia and TT investment Management. Andy was appointed a member of Chikara in 2014.
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Investment process
The investment philosophy of this strategy is based on the belief that high-quality companies, in high-growth segments of the market, can deliver superior returns through compounding over the longer term.
Now the world's most populous country, India offers strong growth prospects, favourable demographics, and low private sector debt. The team believes that Indian market leaders stand to benefit from these dynamics, as well as the rising middle class.
The investment universe includes all 6,200 listed equities in the Indian Subcontinent region. The team carry out a quantitative screen to identify and shortlist companies with high return on capital employed, revenue growth, earnings per share and pricing power among other factors. They remove companies during this phase that have long working capital cycles, variable margins and are heavily geared.
The next stage is qualitative analysis. Here the team analyse how large the addressable market of the company is and what their competitive advantages are. This part of the research process is typically carried out alongside interactions with the company management team to garner intelligence and better judge the ability of management to exploit growth opportunities. Any business which is judged to lack sustainable competitive advantages or have weak management is removed during this phase.
The final portfolio is made up of between 25-40 positions which are characterised into four distinct themes: rising house & savings credit penetration, travel & tourism, the start of a new property cycle and e-commerce & fin tech. These companies are typically expected to grow faster than the broader Indian economy, with strong earnings visibility and durability.
Risk
Risk is split between portfolio and compliance risk. The portfolio manager handles stock selection and market risk, ensuring investments stay within the fund’s defined risk limits. Liquidity, stock concentration, credit, and counterparty risks are monitored by the COO, while daily compliance with regulatory guidelines is independently checked by the operations team. The investment process follows a fully index-agnostic approach, meaning all risk is tied to individual stock selection. Investment decisions are based on the portfolio manager’s analysis and insights, often informed by direct meetings with company management. Consequently, the portfolio’s risk reflects the manager’s judgment and analytical conclusions.
ESG
The team believe that ESG-related issues can influence both the performance and long-term sustainability of an investment portfolio. ESG factors are seen as potential indicators of management quality and operational effectiveness. Companies with strong, sustainable practices are thought to be better positioned to grow and remain resilient across various market conditions. The main purpose of integrating ESG factors into investment analysis and decision making is to identify and manage potential financial risks and opportunities, ultimately aiming to enhance returns.
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