GAM has launched the GAM Star India Equity fund, which will be run by Mumbai-based investment adviser New Horizon. Looking to preserve and grow capital by investing in a portfolio of publicly listed Indian companies, the fund will aim to have a 3- to 5-year investment view.
Managed by a team of four at New Horizon, the fund will use its existing Indian equity strategy which will be adapted for the daily dealing Ucits GAM fund. The strategy has already achieved strong performance independent of market cycles.
The fund follows a bottom-up process and seeks to outperform the MSCI India index, which has a strong bias towards the information technology sector. Minimum investment varies on a case by case basis, but the annual charge is 1 per cent and it has a performance fee of 10 per cent.
Comment:
One of the fastest growing countries in the world, India has many opportunities for a long-term investment. Since the new prime minister, Narendra Modi, was elected in 2014, the economy has taken a positive turn.
Within his first year in office, Mr Modi has seen the economy grow quickly, after promising to attract foreign investment.
For years, economists have been predicting that India could eventually grow quicker than China, and official statistics proved it happened earlier than expected. India’s GDP rose by 7.5 per cent in 2014 (China grew slightly slower at 7.3 per cent).
Business and consumer confidence is high and Indian companies are now well positioned to benefit from the new government policies.
This fund comes with a standard annual charge of 1 per cent, but it is the 10 per cent performance fee that stands out. While it would be a 10 per cent charge on outperformance of the fund, this is still much greater than the majority of active funds available.
An average performance charge would be 5 per cent, and many funds no longer have performance fees.
It could be a sticking point for investors who do not want to be paying extra for a well performing fund as well as an annual charge – plus any potential platform fees.
