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Liontrust India Fund

Q3 2021 review
Past performance does not predict future returns. You may get back less than you originally invested. Reference to specific securities is not intended as a recommendation to purchase or sell any investment.

Over the third quarter of the year, the Liontrust India Fund returned 18.5%, versus the MSCI India Index gain of 15.3% and the IA India return of 14.5%*.


The third quarter saw an emphatic continuation of the Indian market’s strong performance throughout this year − recording an impressive positive return in what was a relatively troubled quarter for global equities. MSCI India returned 15.3%, a huge outperformance against a return of -5.8% for the MSCI Emerging Markets Index, and also a considerable way ahead of the more-defensive developed market return of 1.4%. One of the major sources of volatility within emerging markets over the quarter was a relentless drumbeat of regulatory news flow from China, where the "common prosperity” directives were being executed with considerable zeal. Against this backdrop, India proved to be one of the best insulated markets, being relatively domestically driven, and − if anything − a beneficiary of outflows from China looking for a new home.


Within India, the economic recovery after the 2020 pandemic continued apace, with the effects of the acute, but short-lived, second Covid wave waning considerably. Economic growth remains strong, driven by robust public spending programmes, supported by a loosening of the fiscal accounts at the February budget. Moreover, the long-awaited private sector capex revival showed green shoots, in particular the residential property market. The third quarter saw property registrations − the best indicator of the secondary market − trending unseasonably strongly. New launches were received well, with several more to come into an inventory starved market. Mortgage rates continued to decline, following 18 months of Central Bank rate cuts, to hit all-time lows, supported by a well-capitalised banking system with plenty of liquidity. Infrastructure conglomerate Larsen & Toubro pointed to India being on the cusp of a new capex revival similar to that of the 2003-2008 period, an extremely positive time for the Indian economy (and markets).


The most significant contributors to the outperformance over the quarter were stocks in the real estate and materials sectors, buoyed by the property market recovery and the ongoing strong tailwind for commodity prices, especially in the chemicals sector, where China’s industry rationalisation plans and renewed environmental focus helped to support global pricing. Elsewhere, the Fund enjoyed strong performance from financial holdings, where banks have continued to increase lending and are seeing ongoing asset quality improvements.


It was a relatively active quarter for the Fund, with a number of new positions initiated, including several IPOs. A position was added in online restaurant guide and food-ordering platform Zomato - the first of a pipeline of new economy stocks that will considerably broaden the benchmark index from effectively a zero weighting for internet stocks at the beginning of the year.


Positions were also taken in IPOs for chemical producer Chemplast Sanmar and diagnostic and medical treatment service provider Krsnaa Diagnostics. In addition, positions were initiated in Bharat Forge − where we see significant upside due to an upcoming recovery in auto component demand as the auto market accelerates − and Bajaj Finserv, our preferred exposure in the insurance sector. These positions were funded through taking profits in our mid-cap cement holdings Shree Cement and Ramco, where we were concerned about rising input costs, as well as reducing our lowest-conviction chemicals holding, Sudarshan Chemical to make way for Chemplast Sanmar.


We remain highly positive on the prospects for the Indian economy over the coming years, seeing the potential for the current investment upswing to become a structural tailwind for the economy over the next decade or more. In particular the increased anxiety of investors around China has served to highlight the long-term opportunities for investment in India. The positive demographic reality of India − a young and growing labour force − coupled with a pro-investment and business-friendly government policy presents a highly attractive market for the longer term.


Discrete years' performance (%)**, to previous quarter-end:







Liontrust India C Acc GBP






MSCI India






IA India/Indian Subcontinent













*Source: FE Analytics as at 30.09.21


**Source: FE Analytics as at 30.09.21. Quartiles were generated on 06.10.21.

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Key Risks 
Past performance is not a guide to future performance. The value of an investment and the income generated from it can fall as well as rise and is not guaranteed. You may get back less than you originally invested. The issue of units/shares in Liontrust Funds may be subject to an initial charge, which will have an impact on the realisable value of the investment, particularly in the short term. Investments should always be considered as long term.
Investment in funds managed by the Global Equity (GE) team may involve investment in smaller companies - these stocks may be less liquid and the price swings greater than those in, for example, larger companies. Investment in funds managed by the GE team may involve foreign currencies and may be subject to fluctuations in value due to movements in exchange rates. The team may invest in emerging markets/soft currencies or in financial derivative instruments, both of which may have the effect of increasing volatility. Some of the funds managed by the GE team hold a concentrated portfolio of stocks, meaning that if the price of one of these stocks should move significantly, this may have a notable effect on the value of that portfolio.  


This is a marketing communication. Before making an investment, you should read the relevant Prospectus and the Key Investor Information Document (KIID), which provide full product details including investment charges and risks. These documents can be obtained, free of charge, from www.liontrust.co.uk or direct from Liontrust. Always research your own investments. If you are not a professional investor please consult a regulated financial adviser regarding the suitability of such an investment for you and your personal circumstances. 
This should not be construed as advice for investment in any product or security mentioned, an offer to buy or sell units/shares of Funds mentioned, or a solicitation to purchase securities in any company or investment product. Examples of stocks are provided for general information only to demonstrate our investment philosophy. The investment being promoted is for units in a fund, not directly in the underlying assets. It contains information and analysis that is believed to be accurate at the time of publication, but is subject to change without notice. Whilst care has been taken in compiling the content of this document, no representation or warranty, express or implied, is made by Liontrust as to its accuracy or completeness, including for external sources (which may have been used) which have not been verified. It should not be copied, forwarded, reproduced, divulged or otherwise distributed in any form whether by way of fax, email, oral or otherwise, in whole or in part without the express and prior written consent of Liontrust. Always research your own investments and if you are not a professional investor please consult a regulated financial adviser regarding the suitability of such an investment for you and your personal circumstances. 
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