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Adani underweight constrains Aberdeen New India

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Aberdeen New India Investment Trust (ANII) has released its half year results for the six-month period ending 30 September 2022.

Over the reported six month, ANII reported a NAV total return of 5.9%, and share price total return of 2.8%. This compared to the 8.9% return of its benchmark, the MSCI India Index.

The main contributor to this underperformance was the management team’s zero holding of the Adani Group of companies, which saw substantial share price appreciation over the reported period and contributed to over half of the relative performance of the benchmark over the period. This avoidance was due to the management team’s quality bias, which given their weak financial track records, highly over-leveraged balance sheets and major ESG concerns, which make them extremely risky bets in their view, and ones that they were not prepared to expose the portfolio to. The other major detractor was the management team’s underweight o the Indian technology sector, which held up better than they had expected it to given the headwinds facing the global economy.

The biggest contributors to returns were ANII’s underweight to the energy sector, as well as their holdings in high-quality banks, specifically ICICI Bank and Kotak Mahindra Bank. Both were buoyed by a rising interest rate environment and amid expectations of an improving credit cycle.

Over the period the mangment team have introcued new postions in: Mahindra & Mahindra, the amutomible manufactuere, Delhivery, the logistics firm, and ABB India, the industrial equipment manufactuere. The managment team divested from Zomato and, Azure Power, and Star Health and Allied Insurance; and took from its form their postions in ITC and Larsen & Toubro.

ANII has received a rating of “A” under the MSCI ESG Rating. A Sustainable Investment Report is also published every six months and is available at

On 24 March 2022 the board announced the introduction of a five-yearly performance-related conditional tender offer. The Board was concerned about the relative underperformance of the ANI’s NAV, as compared to its benchmark. Should ANII’s NAV total return underperform its benchmark over the five-year period from 1 April 2022, then shareholders should be offered the opportunity to realise up to 25 per cent of their investment for cash at a level close to NAV.

Over the six months under review, ANII’s discount to NAV widened from 19.4% to 21.7%. ANII bought back 559,372 ordinary shares over the period. Between the period end and 5 December 2022 a further 575,672 shares were bought back.

ANII’s previous chairman, Hasan Askari, stepped down following the AGM on 28 September 2022. He has been replaced by Michael Huges. Stephen White, the previous chair of the audit committee, also stepped down, and was replaced by Andrew Robson.

ANII : Adani underweight constrains Aberdeen New India

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