Top India-Focused Fund Trims Holdings to Buy ‘Best Potential’
The fund has delivered the second highest return among India-focused funds in the last five years.
(Bloomberg) -- An India-focused fund that’s outperformed all except one of its peers in the past five years is narrowing its holdings to shares of companies it sees most likely to thrive as the South Asian nation emerges from the world’s strictest lockdown.
“If the long-term picture hasn’t changed and the potential hasn’t changed, we use any dip to add to our position,” said Ajay Krishnan, who manages the $226 million Emerging India Fund. He’s narrowed his holdings to 28 stocks from 34 to free up cash to buy those shares he deems offer the best potential gains.
The Wasatch Emerging India Fund has delivered the second highest return among India-focused funds in the last five years, according to Bloomberg data. Among Krishnan’s favorites are Bajaj Finance Ltd., now among India’s largest shadow banks. Krishnan bought into the stock in 2015, when it was a fraction of its present size, and is now buying more shares in the lender.
Krishnan sold shares in a hospitality company and some automotive-related stocks that he declined to name to shore up cash to pump into his favored shares. His strategy is to focus mostly on well managed companies with expansion prospects that are too small to be included in the benchmark Sensex and Nifty 50 indexes.
“We are seeing this as a godsend in the market, it is a tremendous opportunity” said Krishnan, who predicts the market turbulence trigged by the novel coronavirus contagion won’t last more than six months.
Other lenders that Krishnan likes for their long-term growth potential include AU Small Finance Bank Ltd., a personal and microfinance lender, and mortgage loan provider Aavas Financiers Ltd. Britannia Industries Ltd. is also among his picks for its prospects of expanding into other food products.
“We’re using this opportunity to put more wood behind the arrow,” said Krishnan.
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