Dear Shareholder

India has defied a global environment rife with volatility and uncertainty to stage an impressive comeback over the last six months, galloping ahead of developed and emerging markets alike. During this period, the Company’s net asset value (“NAV”) rose 13.2% in sterling terms (total return) – a sharp turnaround from the previous six months. The Company’s share price was up 13.7% and the discount to NAV now sits at 19.8%, narrowing marginally from 20.2% at the end of March. While this positive performance is undoubtedly welcome news, the portfolio has lagged its benchmark, the MSCI India Index, which rose 17.1%.

Exuberant investors in sharply rising markets initially tend to chase after short-term trends while overlooking the longevity of companies with pricing power and strong balance sheets. Both fundamentals and the long-term prospects of your Company’s portfolio holdings are intact and your Manager is working hard to improve performance.


The Indian stock market’s strong display over this period goes hand in hand with a robust and resilient domestic economy. After reporting growth of over 7% in the previous fiscal year, India’s GDP rose 7.8% on-year for the first quarter of fiscal year 2024 – the fastest pace in 12 months.

Confidence is running high across several parts of the Indian economy. The property sector is buoyant once again, just a few years after a crash that saw the government tightening up lending and monitoring. Banks are in the strongest position they have been in years, with balance sheets at their most robust in well over a decade. Further boosting the economy is a notable rise in public infrastructure spending. In the first four months of this fiscal year, India has spent a little over 3 trillion rupees (approximately £31 billion) on building infrastructure, marking a 55% jump from the year before.

Another positive factor in India’s favour is that inflation is now manageable. Despite fluctuations here and there, consumer prices have broadly come down during this period, translating into lower input costs for companies.  July, however, was an aberration. A surge in vegetable prices, due to uneven distribution of rainfall during the Monsoon season, temporarily pushed inflation to above 7%. Although that was a surprise, it was not enough to prompt the Reserve Bank of India into action. The central bank has suspended further rate rises just now, while remaining cautious about more unexpected spikes in inflation going forward.

Looking at your Company’s performance during this period, the strongest contributions were from real estate and health care, where the fund has considerably greater exposure compared to the benchmark. The Indian real estate sector is seeing a long overdue recovery in residential property sales, while demand for health care is also on the rise. Your Company’s position in the financials and consumer sectors disappointed largely due to the share price performances of HDFC Bank and Hindustan Unilever, both of which remain high-quality businesses. The Board and I continue to have faith in the trust’s long-term growth potential. Your Manager has continuously adapted the portfolio to market conditions, introducing new names and adding to existing ones to take advantage of India’s growth and structural trends. You can read a more detailed breakdown of this interim performance and changes made to the portfolio in the Investment Manager’s Report.

Environmental, Social and Governance

I am pleased to note that the Company’s portfolio was recently rated “A” under the MSCI ESG Rating. This reflects well on your Investment Manager’s consistent efforts to engage with the companies held within your Company’s portfolio and efforts to drive improvements on various issues. More details on your Investment Manager’s ESG process can be found in the Investment Manager’s Report and Case Studies, as well as in the latest Annual Report. A Sustainable Investment Report is also published every six months and is available at

Conditional tender offer

In March 2022 the Board announced the introduction of a five-yearly performance-related conditional tender offer. The Board decided that, should the Company’s NAV total return underperform the Company’s Benchmark over the five-year period from 1 April 2022, then shareholders will be offered the opportunity to realise up to 25 per cent of their investment for cash at a level close to NAV. For these purposes, the Company’s NAV per share is adjusted for Indian capital gains tax (the “Adjusted NAV”) to enable a like-for-like comparison with the Benchmark.

Over the period from 1 April 2022 to 30 September 2023, the Adjusted NAV’s total return was 5.0% as compared to 10.1% for the Benchmark total return (for further information, please see the Alternative Performance Measures).

Shareholder Engagement

The Board encourages shareholders to visit the Company’s website ( or other social media channels for the latest information and access to podcasts, thought-leadership articles and monthly factsheets. The Board is seeking to improve the information available to shareholders and to encourage greater interaction. Further to this, the Board has supported the enhancement of the website, alongside more frequent updates by the Investment Manager.

Discount and Share Buybacks

The Board continues to monitor actively the discount of the Ordinary share price to the NAV per Ordinary share and pursues a policy of selective buybacks of shares where to do so, in the opinion of the Board, is in the best interests of shareholders, whilst also having regard to the overall size of the Company.

Over the six months under review, the discount to NAV narrowed from 20.2% to 19.8%. During the period, 1.9m Ordinary shares were bought back by the Company, marking a significant increase on the 0.6m shares bought back in the equivalent prior period and in line with the 2.1m shares bought back for the full year ended 31 March 2023.

The Board believes that a combination of stronger long-term performance and effective marketing communication should increase demand for the Company’s shares and reduce the discount to NAV at which they trade, over time.


There are certainly plenty of positives attracting investors to India. It is one of the world’s fastest-growing major economies, benefiting from its resilient domestic macro environment. Supportive government policy has helped this and is likely to remain this way for the foreseeable future, with sufficient fiscal discipline to not worry investors. Continuing expansion of public capital expenditure will support growth momentum, creating more jobs and potentially reviving private capex as well. Even with elections to be held next year, India has less perceived geopolitical risk compared with other emerging market nations, and its companies are benefiting from the “China plus One” strategy as global businesses seek to diversify their supply chains.

Following shareholder approval at the Annual General Meeting in September 2023, the Company may now invest up to 10% of its net assets in unlisted investments. This is intended to give your Manager further flexibility in where to look for quality as the market continues to mature. As with any other areas of investment though, we carefully consider any opportunities and balance the potential risk and reward involved. This change allows your Manager to cast a wider net for quality names, but we can assure shareholders this will not involve any element of compromise on its disciplined and careful approach. Local regulatory approvals are now being sought.

The most recent strong rally aside, India has a lot to offer investors looking to the longer term. With its large population, favourable demographics and evolving middle class, India is a formidable investment opportunity. The structural growth stories we have referenced in previous reports: domestic consumption, urbanisation and infrastructure, together with increasing digitalisation, are as compelling as ever. As a Board, we remain confident in the focus on quality and take great comfort in the Manager’s long-term quality approach. The Board is equally mindful of the need for the Investment Manager to take sufficient risk to ensure that the Company benefits from this resilient economy over the medium term. The Board believes in the Manager’s experienced management team which has assembled a portfolio containing well-managed and resilient companies that are able to keep growing earnings, with strong balance sheets and pricing power that enables them to thrive through economic cycles.

Michael Hughes
22 November 2023

Discrete performance (%)







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MSCI India






Total return; NAV to NAV, net income reinvested, GBP. Share price total return is on a mid-to-mid basis. Dividend calculations are to reinvest as at the ex-dividend date. NAV returns based on NAVs with debt valued at fair value. Source: abrdn Investments Limited, Lipper and Morningstar. Past performance is not a guide to future results.

Important information

Risk factors you should consider prior to investing:

  • The value of investments, and the income from them, can go down as well as up and investors may get back less than the amount invested.
  • Past performance is not a guide to future results.
  • Investment in the Company may not be appropriate for investors who plan to withdraw their money within 5 years.
  • The Company may borrow to finance further investment (gearing). The use of gearing is likely to lead to volatility in the Net Asset Value (NAV) meaning that any movement in the value of the company’s assets will result in a magnified movement in the NAV.
  • The Company may accumulate investment positions which represent more than normal trading volumes which may make it difficult to realise investments and may lead to volatility in the market price of the Company’s shares.
  • The Company may charge expenses to capital which may erode the capital value of the investment.
  • Movements in exchange rates will impact on both the level of income received and the capital value of your investment.
  • There is no guarantee that the market price of the Company’s shares will fully reflect their underlying Net Asset Value.
  • As with all stock exchange investments the value of the Company’s shares purchased will immediately fall by the difference between the buying and selling prices, the bid-offer spread. If trading volumes fall, the bid-offer spread can widen.
  • The Company invests in emerging markets which tend to be more volatile than mature markets and the value of your investment could move sharply up or down.
  • Yields are estimated figures and may fluctuate, there are no guarantees that future dividends will match or exceed historic dividends and certain investors may be subject to further tax on dividends.

Other important information:

Issued by abrdn Fund Managers Limited, registered in England and Wales (740118) at 280 Bishopsgate, London EC2M 4AG. abrdn Investments Limited, registered in Scotland (No. 108419), 10 Queen’s Terrace, Aberdeen AB10 1XL. Both companies are authorised and regulated by the Financial Conduct Authority in the UK.

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