As a consequence of our recent initiative to move the China portfolio to quarterly rebalancing from monthly rebalancing previously (read more >>), fund positioning will remain consistent for the April to June period.
A key feature of our investment philosophy and process is that we are genuinely benchmark and sector agnostic, which is another way of saying we are comfortable being different from the crowd. We run a consistent active portfolio share of 90%+ through market cycles. Consequently, whilst we seek to deliver sustainable long-term outperformance, short-term results can deviate from the index and peer group, often significantly.
April is a good example of this, with the China portfolio underperforming the benchmark by 463 basis points.
Within China, our strategy has major investments in real estate, industrials and information technology sectors, funded by significant underweights to consumer discretionary and communication services, relative to the MSCI China Index.
During April, we took the decision to wind down our outstanding Nifty Futures position and invest the proceeds into direct equity holdings.
A new addition to the Fund is ICICI Lombard (India’s market leader in general insurance). We have also purchased ICICI Bank as well as Gruh Finance, a company specialising in housing finance. The Fund previously held Gruh a few years ago but was sold on the basis of valuation concerns. The stock has been reintroduced following the announcement that the company is being merged with Bandhan Bank, India’s pre-eminent micro-finance lender.
In the materials sector, we have added Asian Paints (India’s largest paint company) and Aarti Industries, a specialist chemicals company with excellent growth prospects. Elsewhere, we have added Titan, India’s largest listed jeweller that is part of the Tata group, and Emami, a consumer staples stock that is likely on the verge of a growth recovery.