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Five years on from soft-closing the fund to new investors, due to fears the growing fund size would lead to an over-dependence on a small number of companies, Stewart Investors has re-opened its Indian Subcontinent vehicle to new investors. The managers stated then that the only alternative to restricting fund inflows would have been to find a wider range of companies to invest in, which would have led to a drop in the quality of companies within the portfolio.
Since the fund soft-closed in 2012, the Indian stock market has seen more than 100 companies enter the index to bolster the size of the investment universe for Indian equity managers, and the subcontinent has also seen an array of new regional investment opportunities over the period. The Indian economy has thrived in recent years, with trade agreements going well and the demonetisation of higher value rupee notes to reduce the impact of black market corruption on the Indian economy just some of the positive contributors during Modi’s reign as prime minister.
Managers David Gait and Sashi Reddy believe this move will allow them access to a greater pool of potential investments in order to generate a return for investors. They also believe it will generate greater portfolio liquidity, which they say is another reason to push ahead with re-opening the fund.
Since David Gait began managing this fund exactly ten years ago, the fund has returned 245.22%*, spectacularly outperforming its benchmark, the MSCI India index, by 203.22%*. The focus is on high-quality businesses, which can result in short-term underperformance, but it has protected investors in difficult market conditions.
*Source: FE Analytics, total returns in sterling, 1 Dec 2007 to 1 Dec 2017