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Hi, my name is Amit Mehta.
I'm a Portfolio Manager on the JPMorgan Indian Investment
Trust.
I've been part of the Emerging Markets and Asia-Pacific team
at JPMorgan for over a decade.
I've been in the investment industry for over two decades.
I'm also supported on the Indian Investment
Trust by my colleagues Ayaz Ebrahim
based in Hong Kong and Sandip Patodia based here in London.
So the team's a lot more than just
about the three portfolio managers
that I mentioned earlier.
We have a strong breadth and depth of analytical research.
We have the ability to both have industry experts who
are based in many geographies around the world.
But also, we have the ability to do on-the-ground research
by having analysts that are based in India.
And this is a real advantage for us
because it allows us to not only just cover
the large and mega caps, where you
do need to have some level of global expertise,
but also go all the way down into the small and midcap
businesses, where actually, there
is a huge advantage of having people based on the ground that
can go and visit the companies, the operations,
see the corporate managements, but also
take those judgments around culture, languages,
preferences, which may be different to when you're
meeting large-cap businesses.
So it's the balance between having industry experts
and local expertise that's a real advantage for us
on the investment trust.
And the way we manage the investment trust
is using the depth and breadth of all of those resources
to be able to find the types of investment ideas
that we're looking for.
So for us, the management of the trust
is very much starting with the corporate-level decision.
So what we're looking at is firstly,
is it a great business?
And we try to identify that by thinking about, what
is the long-term potential of that particular business?
What is the levels of profitability?
And how long will they sustain?
And particularly in emerging markets,
it's really important to have a view about the people running
those businesses and how aligned their interests
are with minority shareholders.
So we spend a lot of time thinking about the governance
and the governance frameworks around the businesses
that we're looking to invest in.
So the first thing that we're trying to assess
is the corporate quality.
And that really starts with asking very simple questions
around the people running the businesses,
the long-term outlook, the underlying economics
and profitability.
After we've made those judgments around corporate quality,
then we think about whether we think we're going to make
an attractive long-term return--
the valuation decision, essentially.
But it is very much in that order.
So the first thing is about, can we find great businesses?
And I'd say that, actually, India as a market
is a pretty fertile ground for finding
businesses of a high level of corporate quality.
So then it's about the idea around,
can we make an attractive return?
And we get lots of questions around the valuation premium
that you're expected to pay in places like India.
And I would say you need to connect valuations
both with the long-term opportunity
but also with the levels of profitability
that the corporate sector in India provides.
And I would say that India as a market
is one of the most profitable underlying markets
around the world.
And secondly, I think it's the area that most understand
very well, to be the most attractive growth
market around the world.
So there is certainly an expectation from my perspective
that there is a justified reason to having
much higher valuations and premiums
in the Indian market versus other markets around the world.
From a top-down perspective, India
continues to look like a very attractive growth opportunity.
And that comes from expectations of double-digit economic growth
supported by low and falling inflation, which
will help to continue to keep interest
rates at current levels or continue to see them falling.
Now, that's the sort of economic backdrop.
But also supporting all of that is a number of initiatives
that we've seen in the market-- one
being the beginnings of corporate CapEx cycle, which
I would say that's been an area that's
been relatively disappointing in the last decade.
And our expectation is actually the next decade
looks much better for an investment perspective.
Unlike other developed or emerging markets,
there isn't legacy infrastructure
that they need to rely on.
So there's an ability to skip-- particularly
in things like telecoms, where you're able to skip the legacy
infrastructure or digital and banking
that you can get yourself into the most modern technologies.
And that should really help particularly
in things like digital penetration, your ability
to reach further and further into rural markets.
And then even in industries like technology,
where you're seeing a much more balanced growth, particularly
in having more and more women in the workforce,
and just getting more and more of that diversity agenda
right up front, rather than having to think about that once
you've got to a much more developed state.
So look, I think there are three reasons
to think about the JPMorgan Indian Investment Trust.
One, which I've already talked about, is the people.
And as I said, it goes much further
than just the portfolio management team
but the depth and breadth of the resources
that we have from our analyst teams across the world.
Two, it's that long-term approach.
And India, again, lends itself to a market
that you want to take a very long-term view
about investments and not worry about short-term trading
opportunities.
And I think there's a depth and breadth of opportunities to be
able to find investment ideas.
And thirdly, being able to leverage
the nature of investment trust structure
and going further and further down
the market cap spectrum, which again connects
very well with the depth of resources
that you need to be able to take those opportunities.
So again, being able to find investment ideas
in that small and midcap area, where
you're likely to see the most attractive growth
opportunities.
So I would say those are the three
key reasons to think about the JPMorgan Indian Investment
Trust.
Yes.
And look, I think for us, it's all about, as I said,
the bottom-up, the company-level decisions.
We spend a lot of time before we make
investments in any businesses.
We spend a lot of time meeting company managements,
understanding how they see the outlook
for their own businesses, how they
see the long-term opportunities, how they
think about capital allocation.
Do they think that they need to grow their business
to reach certain hurdles or certain targets?
How does M&A fit into that-- so mergers and acquisitions
versus organic opportunities?
So for us, it's very much about the company-level decision
first.
I think, on top of that and layered on top of that,
I think there are plenty of thematic opportunities
within the market.
And obviously, the three big themes
that you see across the portfolio
comes from, one, the change in consumer habits and behaviors.
And that's really going to be driven
by the change in the income pyramid
that you're going to see over the next few years.
And there's lots of estimates around how much that might be.
But there's a potential over the next five or six years
to have close to another 100 million people
coming into that middle-income bracket, which again, increases
the propensity to consume.
Secondly, the area that we have significant exposure to, again,
is around the financials industry.
And again, that's an area that we
see a huge long-term potential.
And that really comes from levels
of credit penetration continuing to be relatively low in India
versus other both emerging and developed economies.
So whilst the industries here remain relatively fragmented,
we still see strong opportunities for growth there.
And thirdly, it's an area that has been obviously talked
about a lot in the past but continues
to be an area of opportunity, which
is the onshoring and offshoring side.
In India, IT services sectors being
one of the most attractive growth areas
for a long period of time.
We really don't see that changing, considering
the level of gap in salaries and wages
that the Indian population receives
versus the rest of the world.
So I think those are three big broad themes that we
continue to see as underpinned for the majority
of the portfolio.
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