Fund in Focus: Fidelity India

Indian equities are the best performing Morningstar Category over the past three months. We examine recently upgraded fund Fidelity India Focus

Emma Wall 10 December, 2013 | 4:56PM
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Morningstar OBSR analysts have upgraded Fidelity India Focus fund from Bronze to Silver following the recent change in portfolio manager.

Analysts consider the appointment of Tim Orchard, advised by Sandeep Kothari, is a positive for investors looking for an exceptional Indian equities fund. Kothari is the highly regarded former head of India for Fidelity where he ran portfolios from 2006-12, before the company closed its domestic business. Investors again have the opportunity to invest in a product under his guidance and we think is an attractive proposition.

Given the recent surge in Indian equities - up 15% in the last three months alone - we are sharing the analyst report by Grant Kennaway below.

Analysts Take a Positive View 

Fidelity India Focus is going from strength to strength and we have a positive view on the change in portfolio manager.

It’s rare to find such a positive manager change. We liked this offering under Teera Chanpongsang but following the handover to Tim Orchard, advised by Sandeep Kothari, we believe it is an even stronger proposition. Consequently it is one of our favourite picks in the Indian Equities category. 

Like most Luxembourg-domiciled Indian equities funds, Fidelity India Focus has a named portfolio manager based in Hong Kong. Orchard is advised by Fidelity’s India market guru Kothari, who is an outstanding investor, having led the Fidelity Indian equities business from 2006 to 2012. Although the firm closed its domestic business in 2012, Kothari and his well-resourced team of seven analysts stayed on. The team now advises only the non-India domiciled products, which includes Fidelity India Focus.

While there are some changes to the investment process following the change in portfolio manager, they are marginal and consistent with how Kothari ran his very successful India-domiciled funds. Kothari has more of a quality bias than Chanpongsang. The result is the removal of some of the less-liquid names previously in the portfolio, which led to a marginally more concentrated fund. It is reassuring though that the general sector and stock views otherwise have not differed significantly since the transition. 

Although, as with most portfolio manager changes, the historical performance of the fund is not very meaningful, Kothari has a demonstrable track record on three equity funds. The fund with his longest tenure, the Fidelity Equity Fund, outperformed the category average and the benchmark by 6 percentage points per annum and ranked in the 10th percentile between July 2006 and Feb 2012. 

Fidelity India Focus sports a strong and proven investment team and process, which we believe will deliver solid peer-relative performance for investors. Therefore, it receives our Silver rating.

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

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Emma Wall  is former Senior International Editor for Morningstar

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