Vijay Tohani, the lead manager on the First State Indian Subcontinent fund, has resigned. His future plans are unknown, although First State says the circumstances were amicable.
Tohani joined First State in April 2000 and in 2003 became manager of the £134m offshore Indian Subcontinent fund, which was launched in August 1999. He became manager of the £30m onshore UK Oeic version when it was launched in November 2006.
Tohani is replaced by David Gait, a senior fund manager at the group and deputy manager of the Indian Subcontinent funds since the end of 2007. Gait is also manager of the First State Asia Pacific Sustainability fund. Angus Tulloch, joint managing partner of the Asia Pacific, global emerging markets equity team at First State, replaces Gait as deputy manager on the Indian Subcontinent funds.
Sashipal Reddy, an analyst at First State, has assumed a more involved role within the funds, having offered research support for the past year.
According to Morningstar, the UK Oeic Indian Subcontinent fund was second quartile in the IMA Specialist sector over one year to July 28. It ranked 31 out of 97 funds. Over one and three years, the offshore First State Indian Subcontinent fund is also second quartile. Over three years to July 28, it produced a return of 262 percent, compared with an average Equity Asian Subcontinent fund return of 254 percent.
Gait says there will be no change to the fund’s investment philosophy or process. News of Tohani’s departure came in the same week that Lombard Street Research, an economic consultancy, published a report titled ‘India’s bear market to continue’. It raises concerns over inflation, pointing to wage rises and the effect of a high oil price.
Gait says inflation is a concern. “The current account is heading in the wrong direction, the fiscal deficit is large and oil prices are a huge part of that,” he says. “No company is immune from inflation but some are slightly better positioned.”
Gait is avoiding financial and infrastructure-related stocks in favour of consumer staples and consumer discretionary because “they tend to have good barriers to entry and good pricing power”. Consumer staples has the largest sector weighting in the portfolio at 17.5 percent. Consumer discretionary is about 14 percent.