Where this fund manager finds value in India

By Morningstar Analysts |  16-02-17 | 

Sharat Shroff is the lead manager of Matthews Pacific Tiger Fund rated Silver by Morningstar analysts. He is a co-manager of Matthews India and Matthews Asia Growth that have Bronze and Silver ratings, respectively. He chats with Jerry Kerns, editor-in-chief of the Morningstar magazine.

What’s your favourite aspect of investing?

The act of investing is intellectually stimulating and offers an opportunity to engage with entrepreneurs and business builders. At the same time, success and failure are fairly transparent in investing.

What has attracted you to India?

Investing in Indian businesses offers the potential to get dual benefits of growth and diversification for investors’ portfolios, although investors need to have reasonable time horizons.

In which sectors in India are you finding value?

As long-term investors in the country, we believe there are high-quality businesses in sectors like consumer, financial services, healthcare services, and information technology.

What makes India a good place in which to invest?

We have always been attracted to the management talent in India and their ability to harness the economic tailwinds and build long-term businesses. It further helps that there are productivity gains that can be extracted with some help from structural reforms.

What are the biggest India-specific risks?

Inadequate time horizon is one of the biggest challenges facing investors that are considering India-related investments.

Can India surpass China in terms of growth?

As China’s size grows, it is natural to expect the pace of expansion to moderate, and for India’s to sustain.

However, India still has a lot of catching up to do in other aspects of economic development like creating sufficient employment opportunities.

What other Pacific/Asia markets and sectors are attracting your attention?

The opening of the domestic mainland market in China has been a noteworthy evolution in the Asian capital markets over the past few years. The domestic markets in China offer an attractive combination of risk and reward in a variety of sectors like consumer and healthcare.

What's the biggest challenge facing the region going forward?

Policy missteps by local institutions in Asia, as well as globally, are the biggest risk in my view. For instance, volatility in capital flows catalyzed by actions of global central banks can undermine the progress in Asian capital markets.

Jerry Kerns' interview of Sharat Shroff took place in October 2016 and appeared in the December/January edition of the Morningstar magazine. 

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