India has over 45 million small- and medium-sized companies or SMEs. Compare that number to Canada, which has a registered number of around 1.1 million SMEs, according to the latest data from the Government of Canada.¹ As in most countries, SMEs are the driving force of the economy, normally employing a large majority of the working population and contributing significantly to GDP growth. With India being the fastest-growing, major economy in the world, there is high-growth potential that is waiting to be unleashed in this sector.
Excel Funds offers Canadian investors a unique way to directly tap into this market through the Excel New India Leaders Fund.
“SMEs account for approximately 40 percent of India’s gross domestic product,” notes Bhim D. Asdhir, President and Chief Executive Officer of Excel Funds Management Inc. which has been investing in India since 1998, when the mutual fund manager launched its now flagship strategy, the Excel India Fund. “The share of SMEs as a percentage of all listed companies in India has grown at a rapid pace, more than doubling over the past 15 years. What’s more is, the savings rates among SMEs are very high and they often carry little to no debt. This is the kind of company profile that our portfolio managers actively seek out and invest in.”
Sales at smaller private firms grew 12 percent in 2014-15, compared to 1.4 percent for large companies, according to a survey conducted by the Reserve Bank of India.² Operating profit expanded by 16.6 percent over the same time frame. As global emerging markets rebounded from first quarter lows, Indian small- and mid-caps looked to have been a sweet spot in the March-quarter, returning 8.7 and 8.4 percent, respectively. The MSCI India Index advanced 3.6 percent during the same time frame.³
The mandate of the Excel New India Leaders Fund is to maximize long-term growth of capital by investing in an actively managed portfolio comprised primarily of equity securities of companies located in India that are considered to be emerging leaders. From an investment universe of over 700 companies, the fund will target 25-30 names of under-researched and under-valued stocks to generate alpha.
The Excel New India Leaders Fund is part of an expanded lineup of India-focused investment strategies that includes the Excel India Fund, which is the largest and longest-running, India-focused mutual fund in Canada. The Excel India Fund is also the winner of the 2015 Lipper® Fund Award for Best Fund over 3 years, in the Geographic Equity category. The funds are respectively sub-advised by Aditya Birla Sun Life Asset Management Company Pte. Limited and Birla Sun Life Asset Management Company Limited. Birla Sun Life Asset Management Company Limited is one of India’s leading fund managers, with over US$20 billion in AUM, as of March 31, 2016.
“Currently there are over 700 publicly-listed SMEs in India, collectively representing around 27 percent of total market cap. Most of these SMEs are not included in any index, therefore the team at Birla is able to enhance portfolio returns by investing in these out-of-benchmark stocks,” says Christine Tan, Chief Investment Officer of Excel Investment Counsel Inc. “The Excel New India Leaders Fund is suitable for advisors who believe in the India growth story, and are seeking higher growth potential than what is offered by Indian large-cap equities. This is a long-term investment theme, as it is an opportunity to invest in companies that are likely to become “New Leaders” in their respective industries over the next 5-8 years.”
To learn more about investing in India with Excel Funds click here.
About Excel Funds Management Inc.
Founded in 1998, Excel Funds Management Inc. offers an award-winning suite of emerging market strategies, catering to a broad range of investor profiles and objectives. Leveraging a global network of over 500 portfolio managers and 200 research analysts, our team has firsthand knowledge of the markets in which they invest – providing us with a true competitive advantage over our peers.
Our investment philosophy is grounded in disciplined fundamental research and continuously seeks out new growth opportunities in the emerging markets and beyond. Our on-the-ground sub-advisers and proprietary asset allocation models contribute to the firm being recognized as “The Authority in Emerging Markets”.