Sundaram Asset Management Co., whose India midcap fund has returned almost 30 percent for the past 12 years, opened its first offering that will be managed from Singapore on expectations medium-sized Indian companies will benefit from Prime Minister Narendra Modi’s reforms.
The Sundaram India Midcap Fund, which opened for subscription to wealthy individuals and institutions on June 16, is modeled on the 12-year-old India-based Sundaram Select Midcap Fund, said Benoy Philip, Asia-Pacific head of the Singapore unit. That fund has returned 29.3 percent annually in U.S. dollar terms since Aug. 30, 2002, according to data compiled by Bloomberg. The new fund is managed by Anish Mathew, who was previously the deputy chief investment officer of Societe Generale SA’s asset management unit in Singapore.
Investors are returning to India’s stock market on optimism the biggest electoral mandate since 1984 will help Modi, who was sworn in on May 26, fix the $1.8 trillion economy, Asia’s third biggest. India’s Nifty Midcap 50 Index has gained 49 percent since the beginning of the year, more than double the 24 percent gain of the benchmark Nifty Index.
“With the new government taking over, India is going to see structural growth,” said Vijayendiran Ranganatharao, the Singapore chief executive officer of the Chennai-based fund management company in an interview on July 1. “There will be more opportunities in the mid-cap space than in large caps over the next five to 10 years.”
The fund will invest in 50 to 60 stocks with an average market value of $1.2 billion, similar to the India-based fund, Ranganatharao said. Its first net asset value will be available today, Mathew said.
Philip declined to disclose the assets under management the fund is targeting, citing its open-ended nature which can draw more investors when it builds an investment track record.
Indian equity mutual funds attracted net inflows of 25 billion rupees ($420 million) in May, the most in five years, according to the Association of Mutual Funds in India.
“The mid-cap investment thought process is a bottom-up approach, unlike in large caps which can be a top-down approach,” Ranganatharao said. “That means on-the-ground research is critical.”
Sundaram has eight analysts based in Chennai and Mumbai to research stocks, Philip said.
Prior to his stint at Societe Generale, Mathew was a director of investments at Deutsche Bank AG’s Singapore fund management unit, according to his profile shared by the firm.