Reflected Benefits from 'China' Regulations... India Fund's Returns Lead the Race

24 Funds Achieve 51% Returns Since Early Year
Inclusion of Small and Mid-Sized Companies... Some Funds Reach Over 70% Performance
Vietnam, Russia, and North America Funds Dominate

[Image source=Yonhap News]

[Asia Economy Reporter Minji Lee] As the Indian stock market continues its rally, related funds are also posting overwhelming returns.

According to financial information provider FnGuide on the 9th, 24 India funds launched domestically have recorded an average return of over 51% since the beginning of the year. Compared to other overseas equity funds, they significantly outperformed North America funds (29%), Europe (20%), Japan (13%), China (4%), Vietnam (43%), and Russia (34%), boasting the highest returns.

Currently, despite tightening policies (tapering) and interest rate hike pressures from major countries, the Indian stock market is in a rising rally. The Sensex index, calculated by the Bombay Stock Exchange and comprising the top 30 companies by market capitalization, has risen 26.5% since the start of the year, surpassing the 60,000 mark.

Market-friendly government policies and accommodative monetary policies have acted as factors driving the stock market up. Additionally, concerns over the bankruptcy of Evergrande Group and other China-origin corporate regulatory risks in the second half of the year have led foreign investors to turn their attention to stock markets outside China. India has a low dependence on the Chinese market and generally shows a lower correlation than South Korea and Taiwan.

Namjoong Moon, a researcher at Daishin Securities, explained, “With the expansion of vaccinations and quarantine lockdown measures slowing the spread of COVID-19, and the benchmark interest rate maintained at a low level (4%), the stock market is showing a more robust trend compared to other emerging countries. India is one of the beneficiary countries of the de-Chinafication trend and could psychologically benefit from the escalating conflict between the U.S. and China.”

The returns of individual funds are even steeper. The Mirae Asset TIGER India Leverage ETF recorded the highest performance at 81.58%. This fund tracks twice the return of the Nifty 50 index, calculated by the National Stock Exchange of India. Following were the Mirae Asset India Small & Mid Cap Focus Fund (69.1%), Samsung India Small & Mid Cap FOCUS Fund (68.9%), and Samsung Classic India Small & Mid Cap FOCUS Pension Fund (68.8%).

The funds’ returns surpassing the market returns are attributed not only to leveraging strategies but also to a (multi-tap) strategy incorporating small and mid-cap companies of various market capitalizations, which enhanced performance. A representative from Samsung Asset Management explained, “While including large-cap stocks, we also included stocks that could grow into large caps in 3 to 5 years in the rapidly changing Indian market.”

However, securities firms advise caution when investing in Indian stock funds, given the rapid surge in the market over a short period. They judge that there is limited additional upward momentum based on valuation (price level relative to earnings). Currently, the 12-month forward PER (price-to-earnings ratio) of the Indian stock market (based on Nifty) stands at 23 times, which is much higher than major emerging markets such as Vietnam (16 times), Russia (6 times), Brazil (9 times), and KOSPI (10 times).

This content was produced with the assistance of AI translation services.