Indian funds dominate in 2014

Indian funds dominate the list of the top performers of 2014, with nine out of the top 10 all invested in the subcontinent, according to FE.

The data, which looked at the performance of all funds recognised by the IMA from 1 January 2014 to 22 December, found that the Matthews Asia India fund and the GS India Equity Portfolio fund topped the tables.

Sitting at the bottom of the rankings over the same time period were those funds focusing on Russia and commodities. The Neptune Russia & Greater Russia, Oceanic Australian Natural Resources and Schroder ISF Global Small Cap Energy were at the bottom.

According to FE analyst Thomas McMahon the main reason for the Indian market’s outperformance this year was the election of a prime minister, Narendra Modi, who is seen as pro-business and reformist.

Modi oversaw strong economic performance as chief minister of Gujarat and is the first PM to hold a majority in the lower house since 1984, giving him a strong position from which to make his reforms, says McMahon.

“A large part of the growth in the market was due to optimism, as we can see from the fact that Indian companies are much more expensive compared to their underlying earnings than they were at the start of the year, meaning that investors are prepared to pay more for the same underlying business results.

“However, Indian companies have been seeing good growth in their profits this year, and reforms are likely to support sentiment in the short term. Investors should be aware that the stock market is now more expensive than many other options, however, so they are unlikely to see the same level of outperformance in 2015.”

Commenting on why Russian funds have done so badly, McMahon says the Russian economy has been brought to desperate straits by Western sanctions after Putin’s intervention in Ukraine.

“Russian equities have been hard hit by the collapse in the value of the rouble – it has halved in value versus the dollar this year. But the market has also been hit by the fall in the price of oil, with large oil companies making up 60 per cent of the Russian market.

“Normally being such a large oil exporter would help Russia if its currency fell in value, as oil is priced in dollars, so these could be exchanged for more roubles to fund the Government. However, the plummeting oil price has diminished this effect.

“It is a perfect storm for Russia, and the politics of Nato and Opec means it is hard to see any change soon.”

Source: FE
Top ten performing funds, 1 January 2014 – 22 December
Fund 1 yr returns (%)
Matthews Asia India 59.1
GS India Equity Portfolio 49.9
AXA Framlington Biotech 49.2
Jupiter JGF India Select 49
Jupiter India 49
First State Indian Subcontinent 48.2
Neptune India 46.6
Franklin India 46.6
Baring India 44
BlackRock Global Funds India 43.6
Source: FE
Bottom ten performing funds, 1 January 2014 – 22 December
Fund 1 yr returns (%)
Charlemagne Magna Eastern European -31.1
Pictet Eastern Europe -31.2
Invesco Perpetual Emerging European -31.3
HSBC GIF Russia Equity -40.9
JPM Russia -42.7
Baring Russia -44.1
Pictet Russian Equities -44.3
Neptune Russia & Greater Russia -44.7
Oceanic Australian Natural Resources -49.1
Schroder ISF Global Small Cap Energy -49.4