FSSA Indian Subcontinent I USD Acc |
Morningstar's Take
|07/08/2023by Ramanand Kothari
| FSSA Indian Subcontinent’s topnotch portfolio manager, a solid investment team with one of the best investment cultures in the region, and a distinct, time-tested investment approach continue to earn a High rating for both People and Process Pillars. The strategy continues to benefit from its best-in-class lead manager Vinay Agarwal, who has been at the helm since 2012. He brings two decades of investment experience and joined the firm in 2011, providing stability to investors. Agarwal stands out as one of the most capable managers within the offshore Indian equity space and has consistently impressed us with his exceptional knowledge of the management teams of Indian companies, a solid understanding of portfolio holdings and the investable universe, and a strong passion for investing. The investment team at FSSA has 20 professionals with an average of 12 years of average industry experience. All members are generalists and contribute to the investment process. The team sports a strong investment culture that aligns interests and fosters a long-term investment mindset. This historically stable team has lost six members since 2021. While turnover needs monitoring, we remain confident in its ability and overall resources. Moreover, no leavers directly impacted this Indian equity strategy, and they have hired six new members since 2021, including an India-focused analyst, to bolster the research team. The team employs a bottom-up, quality-oriented, conviction-driven investment approach that has been time-tested and proven effective over various market cycles. It looks for high-quality companies with long-term growth prospects at a reasonable valuation. The most crucial aspect is the quality of a company's management team, followed by the quality of the business franchise and balance sheet. The team focuses on delivering absolute return and places equal importance on capital preservation as growth. Overall, this process is flexible and less price-sensitive than others in this space, and the team is willing to pay up for companies that meet its stringent quality criteria. Its quality and absolute return focus have provided strong downside protection, and the benchmark-agnostic approach has historically exhibited a bias toward the small/mid-cap segments, which have been fertile grounds for high-quality companies. Agarwal has built an impressive track record over his tenure, driven by solid stock selection. Between Aug. 1, 2012, and June 30, 2023, the oldest share class I USD Acc's annualized gain of 12.40% beat the MSCI India Index by 362 basis points and ranking in the 10th percentile among Indian equity Morningstar Category peers. Thanks to its quality focus and prudent investment approach, the strategy has also achieved a lower volatility of returns and stronger downside resilience than its peers over the years. Though the strategy lagged over the trailing three-year period ending June 2023 due to weak 2020-2021 show, near-term performance (2022 and year-to-date June 2023) has improved, and its long-term results remain solid. |
An impressive offshore Indian equity offering.To find out how Morningstar rates a fund click here.
| Morningstar Pillars | |
| People | High |
| Parent | Average |
| Process | High |
Morningstar Medalist RatingMorningstar assigns the Medalist Rating to funds that are qualitatively and quantitatively assessed through manager research and algorithmic processes. The assessment turns on three key “pillars” – People, Process, and Parent – that yield an estimate of how well a fund will perform before fees but after adjusting for risk.
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