Colin Ng, the manager of the Baring Eastern trust, has built a new position of 6.2% in India, after the fund’s benchmark was changed to the MSCI All Country Asiaex Japan index.
Although he says he found several compelling investment opportunities in India while building the position, the manager contends that overall the opportunities are not as attractive as those found in other countries.
However, Barings says the position was not just built to align the fund with the benchmark. Barings’ stated policy is to ensure a well-diversified portfolio, which captures the growth potential of the region. The benchmark is used for comparative purposes only.
Indian information technology firms as well as banks are still “fairly cheap” in terms of valuation, he says. Yet Ng remains underweight the benchmark by about 5% and does not plan to increase his India weighting, mainly because valuations are more attractive elsewhere. (article continues below)
Aside from India, the £55.8m fund is also underweight in Hong Kong and Taiwan and overweight in China, Indonesia and Thailand. Barings’ research also suggests that there is going to be a strong recovery in other Asian countries, such as South Korea and Taiwan.
“We try to add value in terms of stock selection,” he says. “We are putting the fund on the right track in terms of performance recovery.”
Barings says the new benchmark, which was adopted in August, better reflects the investment opportunities in the region..