Last checked at 
10 Oct 2023 10:34
Ashoka India Equity (AIE)
10/10/2023
Results analysis from Kepler Trust Intelligence
Ashoka India Equity (AIE) has released its results for the year ending 30/06/2023. The trust delivered strong outperformance with NAV and share price total returns in sterling terms of 19.4% and 18.3% respectively, compared to equivalent returns of 11.8% in the trust's benchmark, the India Investable Market Index.
Key contributors to performance included vehicle and affordable homes lender Cholamandalam Investment and Finance, as well as ICICI Bank. Electronics manufacturing group Kaynes Technology was also a key contributor to performance.
The managers built on an already impressive track record last year. From inception through to the period end, AIE delivered NAV total returns of 110.4% and share price total returns of 109%, both in sterling terms. That represented substantial outperformance relative to the equivalent returns of 60.9% delivered by the benchmark over the same period.
Kepler View
Since launching in 2018, Ashoka India Equity (AIE) has been the top performing country specialist investment trust focused on India. Last year saw the trust managers build on that impressive track record, with another period of substantial absolute and relative outperformance, something they have also continued in the short period of time since the end of June.
We think the trust offers investors one of the most closely aligned incentive structures in the closed-ended fund sector today. The managers are paid solely on outperformance they deliver over three year periods. The fee, which is 30% of any excess returns, is capped at 12% of the average net assets over those periods. Fees are also paid in shares, with half locked up for an additional three years.
This structure essentially means that the managers can only get paid if they deliver outperformance for shareholders and, to maximise their own returns, they have to do so over a six-year period, meaning there is a meaningful incentive for the managers to produce long-term returns for their shareholders.
The managers also pay careful attention to valuations and have developed their own proprietary cash flow valuation system. They also hold thousands of meetings per year and place a strong emphasis on corporate governance. This is important in any market, but we arguably saw the benefits of this approach earlier this year, as AIE held none of the companies that were hit by a scandal involving the Adani Group.
Combined, we think these factors make AIE an attractive way to access the Indian equity market. As one manager at another trust noted at Kepler's emerging markets event in June of this year, he has never been so upbeat about India as he is today.
We believe that is warranted. Indian GDP growth continues to be strong. The country is benefitting from firms moving manufacturing away from China, as well as the government's 'Made in India' which is designed to foster exactly those sorts of developments. In absolute terms, India produces more STEM graduates than any country on earth and the country's burgeoning technology industry can be seen clearly in the AIE portfolio.
The trust's track record is not a guarantee of future returns. However, we think anyone looking to take an active approach to investing in India is likely to find the trust's aligned fee structure and the strength of its analyst team appealing.
CLICK HERE TO READ THE FULL REPORT Visit Kepler Trust Intelligence for more high quality independent investment trust research.
Important information
This report has been issued by Kepler Partners LLP. The analyst who has prepared this report is aware that Kepler Partners LLP has a relationship with the company covered in this report and/or a conflict of interest which may impair the objectivity of the research.
Past performance is not a reliable indicator of future results. The value of investments can fall as well as rise and you may get back less than you invested when you decide to sell your investments. It is strongly recommended that if you are a private investor independent financial advice should be taken before making any investment or financial decision.
Kepler Partners is not authorised to make recommendations to retail clients. This report has been issued by Kepler Partners LLP, is based on factual information only, is solely for information purposes only and any views contained in it must not be construed as investment or tax advice or a recommendation to buy, sell or take any action in relation to any investment.
The information provided on this website is not intended for distribution to, or use by, any person or entity in any jurisdiction or country where such distribution or use would be contrary to law or regulation or which would subject Kepler Partners LLP to any registration requirement within such jurisdiction or country. In particular, this website is exclusively for non-US Persons. Persons who access this information are required to inform themselves and to comply with any such restrictions.
The information contained in this website is not intended to constitute, and should not be construed as, investment advice. No representation or warranty, express or implied, is given by any person as to the accuracy or completeness of the information and no responsibility or liability is accepted for the accuracy or sufficiency of any of the information, for any errors, omissions or misstatements, negligent or otherwise. Any views and opinions, whilst given in good faith, are subject to change without notice.
This is not an official confirmation of terms and is not a recommendation, offer or solicitation to buy or sell or take any action in relation to any investment mentioned herein. Any prices or quotations contained herein are indicative only.
Kepler Partners LLP (including its partners, employees and representatives) or a connected person may have positions in or options on the securities detailed in this report, and may buy, sell or offer to purchase or sell such securities from time to time, but will at all times be subject to restrictions imposed by the firm's internal rules. A copy of the firm's Conflict of Interest policy is available on request.
PLEASE SEE ALSO OUR TERMS AND CONDITIONS
Kepler Partners LLP is authorised and regulated by the Financial Conduct Authority (FRN 480590), registered in England and Wales at 70 Conduit Street, London W1S 2GF with registered number OC334771.