Indian Equity
Mid-cap
Opportunities
Portfolio
About Standard Life Investments
Standard Life Investments is a leading asset manager with an expanding
global reach. Our wide range of investment solutions is backed by our
distinctive Focus on Change investment philosophy, disciplined risk
management and shared commitment to a culture of investment excellence.
As active managers, we place significant emphasis on rigorous research and a strong collaborative ethos. We constantly think ahead and strive to anticipate change before it happens, ensuring that our clients can look to the future with confidence.
As at 30 June 2015, Standard Life Investments managed £250.0 billion* on behalf of clients worldwide. Our investment capabilities span equities, fixed income, real estate, private equity, multi-asset solutions, fund-of- funds, absolute return strategies and liability- driven investments.
Our parent, Standard Life plc, was established in 1825. A leading provider of long-term savings and investments, Standard Life floated on the London Stock Exchange in 2006 and is now a FTSE 100-listed company. Standard Life Investments was launched as a separate company in 1998 and quickly established a reputation for innovation in pursuit of our clients’ investment objectives.
Our investors rank among some of the world’s most sophisticated and high-profile institutions. They include pension plans, banks, mutual funds, insurance companies, fund-of-fund managers, endowments, foundations, charities, official institutions, sovereign wealth funds and government authorities.
Headquartered in Edinburgh, Standard Life Investments employs more than 1,500 talented individuals. We maintain a presence in over 20 locations around the world across Europe, North America, Asia and Australia. In addition, we have close relationships with leading domestic asset managers in Asia, including HDFC Asset Management Company in India and Sumitomo Mitsui Trust Bank in Japan.
Established in 1999, HDFC Asset Management Company (HDFC AMC) is a 60- 40 equity joint venture between India’s Housing Development Finance Corporation (HDFC) Limited and Standard Life Investments. The company manages a wide range of leading equity, fixed income, corporate credit, liquidity and balanced mutual funds that invest in Indian securities. HDFC Limited is one of India’s most reputable financial institutions, and was the nation’s first specialised mortgage lender. The combined market capitalisation of HDFC Limited and HDFC Bank (India’s biggest private bank), is over US$69 billion.**
*US$393.1 billion, €352.9 billion, AUD$511.5 billion, CAD$490.8 bil-lion. Exchange rates used are US dollar = 1.572700, euro = 1.411507, Australian dollar = 2.046189, Canadian dollar = 1.963438, as at 30 June 2015.
**Source: HDFC AMC 31 October
Contents
3 Introducing the Indian Equity
Mid-cap Opportunities Portfolio
5 What is our investment
process?
6 What is our investment
expertise?
7 Benefits summary
7 Find out more
Introducing the Indian Equity
Mid-cap Opportunities Portfolio
One of the world’s more vibrant and fast-growing economies, India offers a
wealth of investment opportunities. To provide access to this exciting market,
we present the Standard Life Investments Indian Equity Mid-cap Opportunities
Portfolio. Through this, we draw on the investment expertise of our Indian
joint venture HDFC AMC, the country’s leading fund management company. It
advises us in our selection of those small- and mid-cap stocks that we believe
have the potential to deliver excellent risk-adjusted long-term returns.
An invaluable relationship
Indian mid-cap stocks require detailed, resource-intensive, bottom-up analysis. On-the-ground expertise, scale and local investment insights are also key.
As such, portfolio advice will come from Chirag Setalvad, the Mumbai-based portfolio manager of the Indian HDFC Mid-cap Opportunities Fund.* This award-winning Fund has delivered excellent returns since inception, outperforming its benchmark by 7% per annum.** (For more detailed and up-to-date information on Chirag’s performance track record with HDFC funds, please visit www http://www.hdfcfund.com/ DOWNLOADS/monthly-fact-sheet).
Why Indian equities?
India’s position as one of the world’s most rapidly growing economies looks set to continue, thanks to a young and burgeoning
population (over half of its citizens are under 25), rising consumer class and stable political backdrop compared with other emerging markets.
Its economy is diverse, with high-quality companies operating in industries from IT and agriculture, to pharmaceuticals and services. The country is also undertaking a series of reforms designed to attract
investment and create a truly dynamic economy. Meanwhile, its financial system is long
established, healthy and well regulated. As a result of these factors, India has replaced China as the world’s fastest-growing large economy. The country’s GDP is also expected to be bigger than Germany and Japan combined by the end of the decade on a purchasing power parity basis.***
Chart 1: HDFC Mid-cap Opportunities Fund has delivered excellent performance**
0 50 100 150 200 250 300 350 400 450 2008 2009 2010 2011 2012 2013 2014 2015
Indian HDFC Mid-cap Opportunities Fund Nifty 500 NIFTY Mid Cap 100
Why invest in small- and
mid-cap stocks?
¬ They are relatively less well known, meaning stocks have a chance to climb rapidly once investors become aware of their potential.
¬ They have historically outperformed large-caps and offer excellent diversification.
¬ Many firms operate in new and expanding market segments.
¬ Many companies are in charge of their own destinies and therefore more insulated against macro headwinds.
What we can offer
The Indian Equity Mid-cap Opportunities Portfolio is managed by Dr Mark Vincent. He is a portfolio manager within our 12-strong global emerging markets equities team.
Mark will be advised by Chirag Setalvad, who will provide invaluable local expertise and investment insight to help Mark select those Indian equities in which he sees the best outperformance prospects.
Chart 2: Mid-caps create more value over time
Feb 01
0 200
Nifty 500 Nifty Mid Cap 100
400 600 800 1000 1200
Feb 02 Feb 03 Feb 04 Feb 05 Feb 06 Feb 07 Feb 08 Feb 09 Feb 10 Feb 11 Feb 12 Feb 13 Feb 14 Feb 15
Dr Mark Vincent,
Portfolio Manager Indian Equity Mid-cap Opportunities Portfolio
“ Our advisory relationship with HDFC AMC gives me unparalleled access to
its industry-leading investment insights and bottom-up research
capabilities. It is an exciting opportunity to create a truly diversified Indian
mid-cap portfolio with the potential to deliver strong risk-adjusted
What is our investment approach?
To uncover the best available opportunities, HDFC AMC utilises a
bottom-up, fundamental stock-specific research process. Its research efforts
concentrate on understanding a company’s operations and forming a view
on the key drivers and risks. Based on this extensive research and analysis,
Standard Life Investments constructs the Portfolio utilising a disciplined
framework that prioritises company-specific insights, while balancing risks.
Fundamental analysis and research
The investment universe for Indian equities is large, deep and liquid, with over 3,000 stocks available for purchase in the public markets. It is also rapidly expanding. From this universe, HDFC AMC conducts extensive bottom-up research to create a ‘Core List’ of stocks, consisting of sustainable, quality companies that demonstrate credibility and competence of management. The ‘Core List’ effectively covers close to 90% of India’s listed market capitalisation and forms the focus of the fundamental research and analysis.
HDFC AMC’s analysts closely monitor these stocks and are in continuous contact with companies’ senior management teams in order to revise and/or build upon existing data. HDFC AMC also conducts fundamental analysis on all ‘Core List’ companies, applying both qualitative and quantitative metrics.
Core List scoring
Each stock on the ‘Core List’ is attributed a score from one to four based on fundamental analysis and research. In addition to scoring, HDFC AMC analysts periodically submit reports on these companies, including (but not limited to) detailed financials, valuation comparisons, complete rating history and target price history.
Portfolio construction
& implementation
At Standard Life Investments, we then use this analysis and resulting stock insights to construct the Portfolio. High-conviction stocks are strongly represented. Stock selection and position weighting are not driven by benchmark considerations. However, volatility and liquidity are considered when determining the position size of any particular stock.
Standard Life Investments’ investment risk management team calculates key risk information daily. The team, in turn, notifies the manager of any significant changes with the Portfolio’s risk profile.
Overall, we seek to produce a well-diversified portfolio. We also use non-proprietary and proprietary quantitative tools to help identify and control risk factor exposures, including sector and geographic weights, as well as thematic risks, to ensure that no unintended risk dominates and that the Portfolio is suitably diversified.
Chirag Setalvad,
Portfolio Advisor
Indian Equity Mid-cap
“ India is an exciting and diverse market, providing unique opportunities
for bottom-up stock pickers. The mid-cap segment is a particularly
fertile ground for long-term alpha opportunities. I am delighted to
be able to make our expertise in this area available outside of India,
in partnership with Standard Life Investments.”
What is our investment expertise?
Our global emerging markets equities team comprises 12 high-calibre
investment specialists with an average of 16 years’ industry experience.
For our Indian Equity Mid-Cap Opportunities Portfolio, HDFC AMC acts as an
advisor to Dr Mark Vincent.
At Standard Life Investments, we are a fully joined-up organisation, with team collaboration and communication at the heart of our investment process. In addition to the focused advice from HDFC AMC on the Indian equity market, our global emerging markets equities team works closely with colleagues in the corporate credit and emerging market debt teams, often attending company meetings together and obtaining valuable cross capital insight.
HDFC AMC has 21 investment professionals based in Mumbai, India. Its investment team is India- focused, with comprehensive on-the-ground knowledge and an intricate understanding of local culture and business practices. Research responsibilities are divided according to sectors among team members, and HDFC AMC’s scale enables in-depth coverage of a large investment universe, as well as deep local insight based on portfolio managers’ experience. The team also utilises a network of industry contacts to unearth companies that it thinks will outperform over the long term.
Meet the investment team
Dr Mark Vincent,
Portfolio Manager Indian Equity Mid-cap Opportunities Portfolio
Dr Mark Vincent has 15 years’ investment experience, having joined Standard Life Investments in 2000. He previously worked in our European equities and US equities teams before joining the Asia & GEM equities team as a portfolio manager in 2011. He is a CFA Charterholder and his qualifications include the Investment Management Certificate (IMC), a BA (First Class Hons) in Korean and Chinese, and a Masters and PhD in theology, biblical studies and Oriental languages.
Chirag Setalvad,
Portfolio Advisor
Indian Equity Mid-cap Opportunities Portfolio
Chirag Setalvad is a senior fund manager at HDFC Asset
Management Company Limited. Overall, he has 18 years’ industry experience, with 15 years in fund management and equity research, and three years in investment banking. Chirvag joined HDFC AMC in March 2007, having previously worked at New Vernon Advisory Services and ING Barings. He holds a Bachelor’s Degree in Business Administration from the University of North Carolina, US, and was recently voted “India’s No.1 Fund Manager” by ET Wealth-Morningstar September 2015.
Benefits summary
We believe the Indian Equity Mid-cap Opportunities Portfolio can deliver
numerous benefits for investors.
Five reasons to invest
¬ The Portfolio provides access to one of the world’s fastest-growing and vibrant economies.
¬ India offers a variety of investment opportunities and the potential for attractive returns over the long term.
¬ Our advisory relationship with HDFC AMC means we have unparalleled access to its industry-leading investment insights and bottom-up research capabilities.
¬ We only invest in our highest-conviction small- and mid-cap investment ideas that we believe will deliver long-term outperformance.
¬ To achieve this, the investment process prioritises fundamental stock-specific research within a stringent risk management framework.
Risk considerations
The Portfolio may be suitable for
investors who:
¬ want to achieve capital appreciation over the longer term
¬ would like to invest in an actively managed portfolio of mainly equities
¬ have an investment time horizon of at least five years.
The Portfolio may not be suitable
for investors who:
¬ do not want to take any risk with their capital – equity investments are not risk-free
¬ are not prepared to accept temporary losses because of the volatile nature of equities and currencies.
Find out more
If you would like to find out more about our Indian Equity Mid-cap Opportunities Portfolio, please visit www.standardlifeinvestments.com where you will find contact details for your location.
Visit us online
The value of an investment is not guaranteed and can go down as well as up. Past performance is not a guide to the future.
Standard Life Investments Limited is registered in Scotland (SC123321) at 1 George Street, Edinburgh EH2 2LL. Standard Life Investments Limited is authorised and regulated in the UK by the Financial Conduct Authority.
Standard Life Investments (Hong Kong) Limited is licensed with and regulated by the Securities and Futures Commission in Hong Kong and is a wholly-owned subsidiary of Standard Life Investments Limited.
Standard Life Investments Limited (ABN 36 142 665 227) is incorporated in Scotland (No. SC123321) and is exempt from the requirement to hold an Australian financial services licence under paragraph 911A(2)(l) of the Corporations Act 2001 (Cth) (the ‘Act’) in respect of the provision of financial services as defined in Schedule A of the relief instrument no.10/0264 dated 9 April 2010 issued to Standard Life Investments Limited by the Australian Securities and Investments Commission. These financial services are provided only to wholesale clients as defined in subsection 761G(7) of the Act. Standard Life Investments Limited is authorised and regulated in the United Kingdom by the Financial Conduct Authority under the laws of the United Kingdom, which differ from Australian laws.
Standard Life Investments Limited, a company registered in Ireland (904256) 90 St Stephen’s Green Dublin 2 and is authorised and regulated in the UK by the Financial Conduct Authority.
Calls may be monitored and/or recorded to protect both you and us and help with our training. www.standardlifeinvestments.com © 2016 Standard Life, images reproduced under licence INVBBRO_15_1503_INDIAN MID-CAP BROCHURE 0116
