Research from Rplan found that there are 294 India-focused collective investments; including mutual funds, exchange traded funds, and investment trusts.
Very volatile
However, 90% have the two highest risk rankings of six and seven (16% and 74% respectively), which means annualised volatility of between 15% and 24.99% for level six and more than 25% annualised volatility for level seven.
Only half over five years old
The asset management industry has capitalised on the growing investor interest in India by launching 21 Indian collective investments in the past 12 months.
A fifth (63 or 21%) of the 294 have been launched since 2013, with just 47% have been around for at least five years.
“I fear that Indian equities are the latest investment fashion item just as China and emerging markets have been."
Outperform global markets
The Indian stock market grew by around 30% in 2014, and despite returns being negative in 2015, it still outperformed global markets.
Some market commentators are predicting a much stronger performance next year fuelled by steady GDP growth, price falls in commodities such as crude oil, and declining inflation.
Small exposure
Stuart Dyer, chief investment officer of Rplan, said: “The Indian stock market has been outperforming global markets and this explains why we have seen such a big increase in inflows into Indian equity funds.
“However, our research shows that this is a very volatile asset class and investors should only have a small exposure to it as part of a balanced portfolio.
“I fear that Indian equities are the latest investment fashion item just as China and emerging markets have been. These are high profile, but high risk investments and many retail investors are overly exposed to them,” Dyer said.
