The second-best performer is the Goldman Sachs India Equity fund, which has returned £2,603 on an initial £1,000 investment over five years. Its compound annual growth rate of 21 per cent comes despite a loss of 5 per cent in 2013; a year in which India funds shed money en masse.
The Goldman fund is $1.7bn (£1.4bn) in size – far bigger than the typical portfolio in the region. But the fund’s sterling share class has just £19m in assets, indicating that this particular product has limited interest from UK-based investors in the country.
Portfolios from better-known providers, such as Stewart Investors (part of First State) and Jupiter, do have more significant UK asset pools of £282m and £620m, respectively.
But Indian equity funds remain a niche asset class, with most investors preferring to tap the country via broader emerging market or Asia-Pacific equity products.
This approach has pluses and minuses. In favour is the diversification argument, and it is perhaps for this reason that specialised single-country equity funds have become less popular in recent years. Broader emerging market funds sit at the riskier end of the investment scale, and India funds are one step further along, meaning they should only be considered for use in the most aggressive investment portfolios.
On the other hand, holding emerging markets funds typically means sizeable weightings to China, Russia, Brazil, or all three. These markets, which with India form the Bric nations, have all endured significant volatility in recent years, and could represent an uncomfortable exposure for those looking to access the India growth story.
Another way of accessing India is via investment trusts, although here the choice is more limited still.
Just three trusts focus their investments on the country, with the Ocean Dial India Capital Growth trust being the best performer over five years. The trust currently trades on a hefty discount to net asset value of 18 per cent, indicating a significant lack of demand despite the strong returns.
The road ahead
Investors who do back India typically find themselves exposed to three sectors that dominate the MSCI India: consumer staples and discretionary goods (23 per cent), financials (21 per cent) and information technology (17 per cent).
When it comes to financials, many managers tend to take things even further and overweight the sector. And in many ways, banks are a microcosm of the balancing act in which the country finds itself following Mr Modi’s demonetization.