Europe's Third-Largest Fund House Is Overweight India, Here Are Its Favorite Stocks

Aberdeen is overweight India

Aberdeen Asset Management Plc (ADN.L) is one of the largest asset managers tracking the emerging markets (EEM) (VWO). As of 2016, the company has over $400 billion in total group assets under management and advice. Now, while we may see many money managers following the herds and fleeing from India in 2017 as rates and growth pick up in the US, Aberdeen remains noticeably bullish on India (EPI) (PIN) (INDA). As of December 31, 2016, Aberdeen’ $7.4 billion Emerging Market Fund had 16.3% of its portfolio invested in Indian equity.

Aberdeen Emerging Market Fund – India Holdings (as of December 30, 2016)
Portfolio RankNamePercent Weight in the Fund No. of Shares HeldMarket Value
3HOUSING DEV FINANCE INR23.67931557614706533273588802.1
8ITC INR12.68111453255993500199363957.2
18INFOSYS INR51.6026642318003359119171888.9
19ULTRATECH CEMENT INR101.5921846182472250118392639.4
20HERO MOTOCORP INR21.5306759862538035113818942.9
22HINDUSTAN UNILEVER INR11.5089373239215443112202486.1
23GRASIM INDUSTRIES INR21.5086676818825060112182435.9
34ICICI BANK INR21.3018396712573450096802991.96
53TATA CONSULTANCY SVCS INR10.86200357183901864097389.63
66ICICI BANK 1 ADR REP 2 ORD INR100.0161668561605001202145

Aberdeen’s Emerging Market Fund (GEGAX) (GEGCX) (GEMRX) (ABEMX) (AEMSX) seeks long-term capital appreciation by investing primarily in equity securities of emerging market country issuers. The fund returned 11.57% to investors in 2016.

Aberdeen Asset Management’s investment portfolio is currently overweight on this Prime Minister Narendra Modi-led emerging market (EEM) (VWO) on the belief that the country is far more immune to Donald Trump’s protectionist measures than other emerging market nations. As of December 30, 2016, Aberdeen Emerging Market Fund had Indian stocks HDFC (HDB) and ITC amongst its top 10 largest holdings (see chart above).

Better resilient to Trumpian tactics

The recent withdrawal of America from the Trans-Pacific Partnership or TPP is just one example in this regard. Trump’s TPP withdrawal may stand to affect trade and industrial growth in emerging markets such as Vietnam, Malaysia, and Mexico.

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However, India not being a part of the TPP or NAFTA (North American Free Trade Agreement) – which may be Trump’s next target – makes its domestic industry far more protected from the new US President’s anti-globalization actions.

Aberdeen bullish on India: stronger performance ahead

According to Hugh Young, Aberdeen’s Singapore-based Asia managing director, his firm sees the economy has transitioned and is showing significant improvement. He also sees that “the groundwork has been laid for even stronger performance ahead.” “From a fixed-income point of view, we remain particularly bullish on India,” said Young.

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