India: the next economic superpower?

Indy Singh

Fiducian Portfolio Services has announced the successful launch of its India Fund in Australia, to take advantage of one of the world’s fastest growing economies.

Managing director Fiducian Indy Singh said India has made some notable strides over the past 10 years, in particular in the industrial machinery and pharmacy sectors.

“With a GDP growth rate of 9.4 per cent in 2006-2007, up from 7 per cent last financial year, it also has a high savings rate that should underpin a steady to strong growth in GDP over coming years,” he said.

According to Singh, in the absence of serious economic mismanagement, it is forecast that in the next 20 to 25 years India will become a major economic powerhouse ranked third in the world behind the US and China.

Despite the strong economic outlook, Singh said caution is still warranted.

“Investing in the emerging markets is not for the faint hearted or those who need to redeem their investments for cash flow at short notice. It is clearly a long-term investment that believes in the India story and growth in its stock markets.”

Singh said the fund has no performance fees, but will provide investors access to the Indian share market, and a well diversified range of Indian companies.

The fund currently has two underlying managers, the State Bank of India Funds Management (SBI) and Sundaram BNP Paribas Asset Management. The focus of SBI will be the large cap sector, while Sundaram’s focus is the mid to small cap sector.

Since launching in September 2007, the fund returned 9.3 per cent in December with the mid cap sector of the market again outperforming the large cap sector.

The fund is due to be rated by Lonsec and Morningstar after which it may find itself on the BT Wrap and Skandia platforms, Singh said.