India funds are mutual funds that seek to invest in the Asian Subcontinent and emerging markets such as India. These funds can be either indexed or can be actively managed by a fund manager.
These funds often focus on a wide range of themes that play in the economy and can be both sector agnostic or market cap agnostic to get the benefit from the full spectrum.
These funds come with a similar structure as funds offered by mutual fund houses in India. For example, these funds come with different share class where each share class has an additional feature. For example, dividend reinvestment, dividend distribution, accumulation, growth, and the likes.
India funds also have two components of fees – expense ratio and management fee. The expense ratio takes care of the operational cost related to a fund such as custodian charges, brokerage, registration fees, regulatory fees, and the likes. The management fee is the flat fee charges by the asset management company that accounts for the fixed and the variable pay for the fund manager and his/her team of analysts.
When analyzed for the best 18 India funds, it was found that the management fee varies from xx% to xx% whereas the expense ratio varies from xx% to xx%. Remember, the management fee is often reduced or even waived off for particular share class given the sizeable investment this share class brings in. In such cases, a flat fee is applicable irrespective of the performance.
Best India funds
There are not many India funds in the world that are offered by the global asset management companies but from the available ones, following are some of the notable names –
GS India Equity Portfolio
The fund seeks to provide long-term capital growth by investing in shares or similar instruments relating to Indian companies. These companies are either based in India or earn most of their profits or revenue from India. The portfolio will not invest more than one-third of its assets in bonds or fixed income securities. The actively managed fund is benchmarked to the MSCI India IMI Index.
GS Emerging Markets Equity Portfolio
The fund seeks to provide long-term capital growth by investing in shares or similar instruments relating to companies in emerging markets. These companies are either based in an emerging market or earn most of their profits or revenue from an emerging market.
An emerging market is the one that is not treated as “developed markets” in the MSCI World Index or MSCI EAFE Index.
The actively managed fund is benchmarked to the MSCI Emerging Markets Index.
GMO Emerging Markets
The fund invests at least 80% of its assets either directly or indirectly in companies belonging to the emerging market. Indirectly includes through underlying funds or derivatives. All markets that are not treated as “developed markets” in the MSCI World Index or MSCI EAFE Index are considered to be an emerging market. The fund is well diversified across sector and market capitalization.
Eaton Vance Greater India Fund
The fund invests around 80% of the corpus in equity securities of companies in India and the surrounding region of the Indian subcontinent.
The company and typically invest at least 50% of its assets in equities of Indian companies and not more than 10% of its total assets in countries other than India.
The fund invests in companies across market capitalization and is well diversified across sectors.
Best Fund managers for India funds
Hiren Dasani, CFA is a Managing Director and Portfolio Manager at Goldman Sachs Asset Management (GSAM). Dasani heads the emerging markets team. Mr. Dasani joined the firm in January 2007. Before joining GSAM, he worked SSKI Securities, Prudential ICICI, UTI Bank and Dorf Ketal Chemicals. Dasani holds a PGDM in Finance and a BE in Chemical. He is also a CFA charter holder.
Ms. Ingrid E. Baker, CFA serves as the Head of Emerging Markets and Portfolio Manager at Invesco Advisers, Inc. Before joining Invesco in 1999, she worked with HSBC Asset Management, AIG Global Investment Corp., Banco Santander de Negocios.
Baker holds a BA in International Politics and earned an M.B.A. from IESE Business School. She is also a CFA charter holder.
Ms. Flavia Cheong, CFA, is the Head of Equities at Aberdeen Asset Management (Asia) Ltd. Before joining Aberdeen in 1996, Ms. Cheong was an economist with the Investment Company of the People’s Republic of China and Development Bank of Singapore. She graduated with a BA in Economics and an MA (Hons) in Economics from the University of Auckland. She is also a CFA charter holder.
Mr. Sammy Simnegar serves as a Portfolio Manager at Fidelity Investments Canada Limited. Before joining Fidelity in 1998, he worked at JP Morgan, Trans Alliance Group.
Simnegar earned an M.B.A. in International Finance and a B.A. degree in History.