FIDELITY India FUND
OBSERVED
THE SUCCESS OF INDIA
LIES IN THE AMBITIONS OF
ITS YOUTH
Almost 50% of
India’s population
is under 25 years
of age1. They
are increasingly
educated, ambitious
and more prepared
to spend than
India’s older
generations.
India’s industrial revolution has notched up
some impressive achievements. Its economy
has been one of the fastest-growing in the
world, with GDP growth averaging over 6%
a year for the past decade.2 The established
Indian stock market has returned over 11%
per annum over the past 10 years.3
India is establishing itself as an economic
force. It’s a country of vast size and
population with an industrial revolution
underway, which means it offers
tremendous potential for Australian
investors.
OPPORTUNITIES IN india
Fidelity believes that, notwithstanding
periodic slowdowns and short-term
volatility, the outlook for India is strong.
India’s economy holds three key advantages
that point to long-term economic growth:
an expanding middle class, highly
favourable demographics and a skilled
workforce. India also has stable political and
legal systems, a pro-business government
and a well-established stock exchange.
A GROWING MIDDLE CLASS
It is estimated that income levels in India
will almost triple between 2005 and 2025,
seeing the size of India’s middle class
with higher disposable incomes expand
significantly.
Penetration of household goods and services in India
Households with television (%)
Mobile phones
(per 100 people)
Passenger cars
(per 1,000 people)
Personal computers
(per 100 people)
India 53
21
8
3
Australia 99
101
542
60
US
95
85
461
81
Source: World Bank, June 2009.
1. US Census Bureau, Internet Database, December 2007 (latest available data).
2. International Monetary Fund, World Economic Outlook Database, October 2009.
3. Based on MSCI India. DataStream, September 2009.
4. The ‘Bird of Gold’: The Rise of India’s Consumer Market, McKinsey Global Institute, May 2007.
5. US Census Bureau, Internet Database, December 2007 (latest available data).
If Indian consumption patterns mirror those in
Western countries, there is vast potential for
consumer sales as Indians become wealthier.
This is because few Indians have what many
in richer countries regard as essentials: a
car, a TV, a PC and a mobile phone. India
is expected to become the fifth-largest
consumer market in the world by 2025.4
FAVOURABLE DEMOGRAPHICS
India’s 1.1 billion-strong population is young
when compared with western countries,
as almost 50% of the country’s population
are under 25 years of age.5 India’s young
population means it has a relatively low
number of dependents as a percentage of total
population. As more people in the economy
work to support fewer people, discretionary
consumer spending is likely to jump.
SKILLED WORKFORCE
India’s other big advantage is that many of its
young workforce are highly skilled. The large
number of scientists, engineers, lawyers and
financial managers are helping high-value
industries succeed in India and are attracting
foreign investment into the country. It is
generally much cheaper to employ a wellqualified person in India than a person with
similar skills in a western country and English
is widely spoken.
FIDELITY GLOBAL
FIDELITY
FIDELITY
EQUITIES
China
India FUND
There are some great investment
opportunities in India, but you can only
benefit from these opportunities by
investing in the right stocks. In a developing
market such as India, local knowledge of
the customs and dynamics of the market is
essential in order to pick the right stocks.
First-hand local knowledge
is the Fidelity edge
Fidelity has a deep understanding of the
Indian market, having invested in India for
more than 15 years since its share market
was opened to foreign investors in 1993.
Our local knowledge, coupled with
the global insight from our network
of investment professionals, produces
valuable insights into every aspect of an
Indian company’s performance – from
its efficiency on the factory floor to the
soundness of its offshore markets. In
fact, we have one of the largest buy-side
research teams in the world, monitoring
more than 90%6 of the world’s largest listed
companies – an important consideration
given the increasing revenue generated by
Indian companies overseas.
Market conditions in India can change
rapidly, so we’ll regularly investigate
companies to make sure they still meet
our criteria for a sound investment. Our
dedicated resources contact Indian
companies every 90 days7 to refresh our
investment thesis.
The team behind the fund
Fidelity established an investment team in
Mumbai in 2004, making Fidelity one of
the few foreign fund managers to have a
presence in the country.
Analysts and portfolio
managers worldwide
Over 900 investment professionals
worldwide cover more than 90% of
the world’s largest listed companies
Our team of India analysts plus portfolio
manager, Teera Chanpongsang, are
supported by the global team. Teera and
a team of four regional industry analysts
are based in Hong Kong and five dedicated
Indian equity analysts are based in Mumbai.
The team is supported by three research
specialists based in New Delhi who provide
extensive data and analytical support.
Staying connected
Global research is the key to Fidelity’s
investment advantage. But it’s not just the
size of our research team that gives us that
edge. It’s the way we share information that
makes the difference.
Every piece of relevant information one
analyst uncovers effectively becomes
hundreds of times more valuable because
it’s shared in real-time across our 900-strong
team of investment professionals.8
INVESTMENT STYLE
Fidelity’s investment philosophy works on
the premise that markets are semi-efficient
and share prices don’t always reflect
inherent value. To uncover opportunities
for outperformance in the Indian market,
portfolio manager Teera Chanpongsang
draws on our in-house, bottom-up
fundamental research.
As an emerging market, India is considered
a less efficient market in which active stock
picking can add significant value. Teera’s
experience combined with his access
to superior research gives more scope
to achieve higher returns. He looks for
companies that have attractive valuations
and show higher-than-average growth
relative to the industry and market.
India company analysts
5 analysts in Mumbai
4 analysts in Hong Kong
3 research specialists in Delhi
Key fund facts
Portfolio manager
Teera Chanpongsang
Benchmark
MSCI India Index
Objective
To achieve returns in
excess of the benchmark
over the suggested
minimum investment
time period of five years
Inception date
29 September 2005
Ex-ante tracking error*
Generally between 3%
and 6%
Portfolio guidelines**
Stocks: Generally +/–5%
from benchmark
Sector: Generally +/–10%
from benchmark
Cash holdings
Target range is between
0% to 10%
Number of stocks
Generally 80 to 120
Management costs***
1.20%pa
Buy/sell spread
0.50%/0.50%
Suitable for
Investors looking for an
actively managed Indian
equities investment
* Also known as active risk, tracking error is a measure of a fund’s
risk or volatility relative to the benchmark. It measures the risk of
significant departures from the benchmark. Index funds tend to
have a tracking error close to zero, while an actively managed
portfolio will tend to have a higher tracking error.
** Industry allocations are a result of stock allocations. These
ranges are guidelines only.
*** Investors accessing the fund through a master trust or wrap
account will also bear the fees charged by the operator of the
master trust or wrap account. Refer to the PDS for important
information about fees and costs. The Fidelity India Fund PDS can
be downloaded from our website at www.fidelity.com.au/FAR
Make Fidelity’s advantage
your advantage
You can only benefit from India’s
growing economy by investing in the
right stocks.
Fidelity has the advantage of more than
15 years experience investing in India.
We have local knowledge of Indian
customs and the dynamics of the local
market.
We have the advantage of being
able to research Indian companies
not just locally but globally too; and,
importantly, we refresh our information
on these companies every 90 days.
Teera Chanpongsang
Portfolio Manager
Fidelity India Fund
6. As at 31 December 2009. World’s largest companies refers to the MSCI World Index. % of index rated in last 120 days.
7. For smaller companies we make contact at least every 120 days.
8. At 30 September 2009. This figure represents the resources of FIL Limited, a Bermuda company and its subsidiaries, plus its affiliate
FMR LLC, a US company and its subsidiaries. The investment professionals figure includes portfolio managers, research analysts,
research associates, traders, division management and other investment professionals.
To know more, visit www.fidelity.com.au
This document is intended for the general information of financial advisers and wholesale investors only.
Retail investors should seek advice from their financial adviser before making a decision. This document has been prepared without taking into account your objectives, financial situation or needs. You should
consider these matters before acting on the information. You should consider the Product Disclosure Statements (PDS) for respective Fidelity products before making a decision whether to acquire or hold the
product. The relevant PDS can be obtained by contacting Fidelity Australia on 1800 119 270 or by downloading from our website at www.fidelity.com.au This document is intended as general information only.
This document may not be reproduced or transmitted without the prior written permission of Fidelity. The issuer of Fidelity’s managed investment schemes is Perpetual Trust Services Limited (“Perpetual”) ABN
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Guide, a copy of which can be downloaded from our website at www.fidelity.com.au Reference to individual companies is for illustration purposes only and does not constitute a recommendation. Past performance is not
indicative of future performance. The return of capital is not guaranteed. © 2010 FIL Investment Management (Australia) Limited. Fidelity, Fidelity International and Pyramid Logo are trademarks of FIL Limited.