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New India Leaders Fund Celebrates One Year Anniversary

Excel Funds’ New India Leaders Fund celebrated its 1-year anniversary on April 22, 2017. The fund has experienced healthy growth in its first year with 1-year annualized returns of 34%[1]­­­­­. The fund invests in equity securities of companies located in India that are considered emerging industry leaders or small/medium cap companies. Excel Funds’ sub-advisor for this fund, Birla Sun Life Asset Management Company Ltd, is based in India and therefore has the advantage of being on-the-ground with access to these companies directly. The sub-advisor seeks out companies in the midst of their growth cycle who have yet to reach their full potential in order to capitalize on their future development.

Flourishing amidst a challenging environment, the Small and Medium Enterprises (SMEs) of India experienced astounding highs, and some lows, in the past few years. This sector has emerged as a highly vibrant and dynamic sector of the Indian economy. With the Indian economy expected to emerge as one of the leading economies in the world and likely to become a $5 trillion economy by 2025[2], major attention is being given to strengthen the backbone of the economy - the SME sector. 

Working in tandem with the larger goal of pushing for economic growth, the implementation of many reforms made the SME/start-up space relatively bullish in 2016. These include re-implementation of Public Procurement Policy, Make in India, Startup India, and most recently, the confirmation of the Indian GST tax reform. For SMEs, the GST bill will help simplify indirect taxes, have more transparency of tax process, draw projections of production cost and gain easy access to new geographies for business expansion. The government plans to make financial and technical support more accessible in order to increase growth of the manufacturing sector by 12-14% per annum and increase its share of GDP to 25% by 2025[3].

But why are these small businesses extremely crucial to the Indian economy? This is because they contribute to over 8% of the national GDP, account for 45% of the manufacturing output, 40% of the exports from the country and create more job opportunities than all the large and multination corporations in India put together[4]. Their role cannot be underestimated and as such, it helps to have a grasp on the SME demographics in India.

Of late, the Indian small and medium cap stocks have performed very well as the small and mid-cap stocks on the BSE index gave returns of 27%. The Indian government realises the urgency for providing fast-paced growth to the SME sector and therefore, 2017 should continue to witness strengthening of current policies and introduction of new initiatives to improve the business environment for SMEs. 

 

[1] Morning Star data in CAD terms, as at April 30, 2017

[2] The Economic Times Small Business, “India SME Trends: The year gone by and 2017.” December 30, 2016

[3] The Economic Times Small Business, “India SME Trends: The year gone by and 2017.” December 30, 2016

[4] Sumo Publications, “The Demographics around Indian MSMEs.” May 19, 2016.

 

“Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus before investing. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated.”

Speculation or stated beliefs about future events, such as market and economic conditions, company or security performance, upcoming product offerings or other projections are “forward-looking statements.” These forward-looking statements represent the beliefs of the speaker or author and do not necessarily represent the views of Excel. General business, market, economic and political conditions could cause actual results to differ materially from what the speaker or author presently anticipates or projects.

The information contained in this article is for informational and illustrative purposes only and is not intended to provide specific financial, investment, or other advice to you, and should not be acted or relied upon in that regard without seeking the advice of a professional.

© 2017 Morningstar Research Inc. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Morningstar ratings are subject to change on a monthly basis

Disclaimer

Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus before investing. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated.

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