Carmignac’s Simon Pickard has increased exposure to India in the £1.6bn Carmignac Emergents fund by building up holdings in companies such as car manufacturers Maruti Suzuki and Tata Motors and financial group Icici Bank.
Pickard has upped the fund’s alloaction to India from 6 per cent to 8 per cent, as he reckons the Government’s latest plans to open up the retail industry to multinational companies means “there is clearly a lightbulb going on”. The manager adds that other measures also recently undertaken, such as tackling the budget deficit, calling in loans and the recent cut in diesel subsidies, means “the Government realises something has to be done.”
“There has been no investment in India in the past two years as there has been no political direction,” Pickard says. “There has been no public investment as nothing could get through the bureaucracy and no private investment because of the current account deficit. India needs triggers, and so far, we have had the initial stages, but we want to see a follow through. We have made an initial move but we want to see the banking sector lending again.”
Pickard has 45 per cent of the portfolio in consumer goods, although he says the financials and infrastructure sectors have more chance of being re-rated.
“I am a long-term fan of consumer goods businesses, as they can grow their earnings per share sustainably over the long term,” he says. “We will have less than 45 per cent in the sector but at the moment I am still worried about the state of the world.”
He adds: “I am prepared to be slightly more aggressive on emerging markets today, but the global economic problems are such that today it is a big bet to move out of consumer staples. We are taking some money out of the sector – we have reduced it by about 6 per cent already – but it should be a third of the portfolio. It is very clear the macro economy is not recovering. The economy is pushing down and the Fed is trying to push it back up.”
Over the year to 1 November the fund is up 5.69 per cent against the 5 per cent average of the IMA Global Emerging Markets sector, according to Morningstar.