Andrew Beal, manager of the £226m Henderson TR Pacific investment trust, has reduced his cash position from 10% to zero over the past two months and increased his weighting to India.
From a low of 5% in June the fund’s weighting to India has increased to 11%. According to Beal, market falls and an improvement in the macro – economic backdrop have thrown up some interesting opportunities.
“What we’ve got now is an opportunity [to buy into] better quality, longterm Indian companies,” he says.
“It’s a case of selectively adding where we think things have been overdone. Markets have been falling and particularly interest-rate-sensitive com panies have been falling. Now it would appear we’ve seen a turning in commodity prices.”
The fall in the prices of oil, rice and wheat has the potential to alter India’s fundamentals significantly, Beal says.
First, it should help lower inflation and bring forward a peak in Indian interest rates.
Second, it will alleviate the strain on Indian government finances from oil subsidies.
Third, it will help control the country’s current account deficit.
Beal’s most recent stock purchase in India is BHEL, a supplier of power generation equipment. He has also added to existing positions in the banking and telecom sectors.
Over one year to August 1, Henderson TR Pacific fell by 13% compared with an Asia Pacific ex-Japan average drop of 12.6%, according to Morningstar.
Over three years, the fund produced a return of 38.1% compared with an average return of 32.8%.