Advisors missing out on India potential

Investing in India is often eschewed by investors and advisors alike as home bias pervades in Canada – but one advisor says it’s a huge missed opportunity

In the immediate Brexit aftermath, Harry Ananth of HollisWealth – like advisors across the globe – kept an eagle eye on his funds. But rather than witness the volatile swings plaguing other markets, the object of his scrutiny – Excel Funds’ India Fund – kept an even keel, even as the pound and stock markets plunged.

“I watched it very closely for those two days,” he says. “When the world fell apart on Friday, the so-called widely diversified U.S. 500 was down 3.6% on Brexit news, compared to the India fund, which dropped only 1.6.” By the following Monday, the fund had rallied 1.4% - “But nothing had changed,” he says. “The world was still falling apart on Monday.”

Ananth says the resilience of the Indian market – coupled with massive growth - makes it an ideal opportunity for long-term investors. However, a high-risk stigma, along with an aggressive rating from Canadian regulators, can make it challenging to drum up interest.

“I’ve been one of the first investors in the Indian market, and Excel has been there since 1998 – and in those days, advisors didn’t want to talk about India,” he says. “They still thought of it as a place where you’d probably see elephants, snakes and whatnot.

“For those who are investing in the longer term, the opportunities that are presented within the Indian market are huge. India has the potential to become one of the world’s largest and most dynamic economies.”

He points to the growth of the nation’s middle class – booming between 100 – 150 million people – and a healthy GDP of 7%, compared to the stagnant growth experienced that has plagued Canada. “Here, we get excited with we see a 2.5% growth rate in GDP,” he says.

He says that clients, once educated on the growth potential, are eager to invest in India – often beyond what’s possible.

“In my own client base, I’ve convinced them and many of them are invested, but it depends on the size of the portfolio,” he says. “The larger the portfolio, the easier it is to allocate 10 to 15% of the portfolio. The smaller portfolio, it’s very difficult even though many of them are interested.”

“Unfortunately the regulators say this is classified as the highest risk – they say it’s very aggressive and they put it in the same category as individual stock that somebody could be buying in the local market, which is wrong.”

Ananth adds that many advisors remain uncomfortable – and uneducated – regarding Indian investment options, which only further feeds into Canadian investors’ typical home bias.

“I believe there’s a huge gap,” he says. “Canadian advisors are not well informed, and they don’t want to be educated because today there’s a lot more information available. You don’t have to go to Excel for it – all they have to do is open up BNN.

“The people who are running the country have bright minds, and the opportunities are there. We as Canadians, and especially advisors – if we don’t learn ourselves, how can our investors learn about it?”

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