Last checked at 
8 Mar 2021 15:32
Ashoka India Equiy (AIE)
08/03/2021
Results analysis from Kepler Trust Intelligence
· Today Ashoka India Equiy (AIE) released its interim results for the period ending 31 December 2021. Over the six-months, the trust delivered NAV total returns of 28.6%, while the share price rose 39.1%. This compares favorably relative to the benchmark MSCI India IMI index, which returned 27.1%.
· Performance was largely driven by stock specific selection, demonstrating the manager's alpha generating capacity and the benefits of a large, 'on the ground' investment team.
· The manager believes that Prime Minister Modi's reforms are starting to bear fruit and the recent budget is likely to provide further tailwinds. In fact, the investment manager's report stated "this should go down as perhaps one of the best budgets from the Government, which reaffirms growth orientation and furthers the Prime Minister's goal of promoting ease of doing business in India".
Kepler View
Since the removal of lockdowns across India, the short term economic and market performance has surprised analysts on the upside, resulting in a number of upward revisions to growth estimates. Aiding this has been the promising start to the vaccination process. The Serum Institute of India - the world's largest vaccine manufacturing company - already has over 100 million doses stockpiled and has the capacity to produce a similar number every month. Alongside an improving short - term outlook, the government has pushed through landmark reforms in agriculture and labour markets, as well as a 'bold' incentive to make India the manufacturing hub of the world.
The White Oak team are looking to capitalise on these short and long-term tailwinds but remain true to their clear and well-defined processes, which revolve around identifying strong companies at the right valuations, using a proprietary cash flow valuation metric. This team is incentivised by an unusual performance fee-only charging structure. There is no management fee payable unless the trust outperforms the benchmark over a three year period. This performance fee is worth 30% of the outperformance, paid in shares, and is mostly locked up for three years.
Whilst India has lagged the MSCI Emerging Markets Index in recent years, in our view it remains an attractive place to invest for the long term. Currently AIE is trading at a discount of 0.9%, although this has not been uncommon for the trust to trade at a premium since inception.
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