Goldman Sachs India Equity Portfolio

Goldman Sachs India Equity Portfolio's objective is to capture the growth potential of the Indian economy. It is focused on investing in sound businesses of all sizes. Company meetings are a crucial part of the process, and the team's ability to meet companies on the ground in India differentiates it from many in its peer group.

Our opinion

This is an all-weather India fund with a well-resourced and experienced team, based in Asia. It has a solid investment process and we particularly like the many company meetings the team undertake. The manager has a very good and consistent track record. With the resources available to him there is no reason why he should not continue to outperform.

Fund manager

Hiren Dasani began managing the Goldman Sachs India Equity Portfolio in June 2013. Based in Singapore, he joined the company in 2007 and is also co-head of the emerging markets equity team. Hiren achieved a Bachelor of Engineering (Chemical) from the University of Baroda in 1997, before working in fixed income at Prudential ICICI and then as a research analyst at SSKI Securities.

Like the population, investment opportunities in India are still young and growing.

Hiren DasaniFund manager

Investment process

The team starts by evaluating the attractiveness of a company's industry. Highly competitive, capital-intensive industries with low returns may be ignored entirely. The team will then focus on the valuation of a business. Real cash flows are prioritised over paper profits and Hiren only invests where he sees the opportunity for a substantial gain. The team never says no to a meeting as it can always learn something about the industry, even if it has no intention of investing.

ESG

ESG - Integrated  

Rather than a rules-based approach, GSAM incorporates ESG in its philosophy and approach to finding companies. The fund focuses on finding businesses with the ability to generate sustainably higher returns on invested capital, which is measured through assessing cash flow generation. The managers believe this is a powerful indicator of good ESG practices. Firms with negative ESG characteristics are likely to receive fines, have opaque accounts or poor capital allocations which are unlikely to produce good free cash flows. This results in exclusions for failing firms. If the fund is presented with two very similar investment opportunities, the managers would look to allocate to the one with better ESG practices than those with more short-term upside, but lower ESG standards. This work is based on a risk-based framework assessing the material impact of ESG issues. It is supported by regular company engagement which helps to creates in-depth, proprietary ESG knowledge. This engagement goes beyond the analysis though, with thought leadership and engagement efforts from GSAM’s Global Stewardship team helping with proxy voting and managing wider GSAM strategic issues against their portfolio companies.

Risk

Goldman Sachs India Equity Portfolio is well diversified, with between 70 and 90 holdings to reduce stock-specific risk. This is a single country fund with a bias towards medium and smaller companies, so it is heavily dependent on the Indian economy and it will be volatile as a result. Investors should also be aware of the currency risk.

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