The JB Chindonesia fund has increased its exposure to Indian cyclicals in light of attractive valuations and falling inflation.
Swiss & Global’s Vincent Lagger, the co-manager of the £12.2m portfolio, says the fund’s weighting to India has risen from 15% in November last year to about 22% today.
“When you have inflation running over, monetary policy very tight and GDP slowing down for four or five quarters but about to turn around, that’s a sweet spot for equities,” he explains.
“Downgrades have been down and valuations are cheap, so we increased the Indian exposure.”
Most of this move was funded from the “big cash position” the fund established since the summer of 2011. (article continues below)
Lagger, who runs the fund with Jian Shi Cortesi, says the portfolio’s beta exposure has been added to through cyclicals, with the defensive stocks left as they are.
Recent additions to the portfolio include wrist watch manufacturer Titan Industries and utility Tata Power as the managers attempt to capitalise on India’s strong domestic demand, growing luxury spending and the move towards urbanisation.
Another recent purchase is finance provider HDFC Bank. Lagger sees plenty of growth potential in the sector: “Indian financials are in a different world to the West. Banking is still very basic – there is no penetration of credit cards, no penetration of mortgages.”
The JB Chindonesia fund has also added to existing holdings in industrial goods manufacturer Bharat Heavy Electricals, multinational conglomerate Larsen & Toubro and automotive corporation Tata Motors to increases it cyclical exposure.