Exceptional long-term performance: Ashoka India Equity

AIE has slipped onto a discount despite exceptional long-term outperformance…by Ryan Lightfoot-Aminoff

Overview

After trading at a premium for much of its existence, Ashoka India Equity (AIE) has slipped to a rarely seen Discount this calendar year, despite the excellent long-term performance of the trust in both absolute and relative terms. This strong record has been driven almost entirely by the well-resourced Management team’s stock selection focus, which has generated considerable alpha from the smaller companies in the market. In the near term, this small-cap bias has been less supportive as volatility has hit markets, which has been particularly impactful for active managers. However, AIE has significantly outperformed its peer group over both the short and long term, leading to the trust being awarded Kepler’s Growth rating for 2026.

Whilst the near-term environment has been more challenging, the trust’s management team believe many of the issues show signs of abating. They note that earnings revisions appear to have stabilised and that India’s valuation premium is back in line with long-term averages. Furthermore, they argue that the macro issues the country has faced are temporary, and that incremental news is increasingly positive (see Performance).

That said, the managers remained heavily focussed on bottom-up stock opportunities, using the size and experience of their locally based analyst team to filter through the large universe for the best opportunities. In the past year, the IPO market has provided a good source of new ideas, with stocks from the consumer discretionary, healthcare, and industrials sectors providing compelling options (see Portfolio).
 

Analyst’s View

 
The long-term track record of AIE speaks for itself, with cumulative returns since inception of 151.4% to 24/04/2026 according to Morningstar, compared to the index of 81.8% despite the fact that AIE’s returns, and not the index’s, are impacted by capital gains tax. Regardless, this headline figure overlooks the key attraction behind the returns, the fact that the vast majority comes from stock selection, which we believe is impressive, and helps the trust stand out amongst peers.

Further adding to how impressive these returns are is the eyebrow-raising stat about small caps providing negative attribution since inception. The asset class has now underperformed in half the years of the trust’s existence, meaning the long-standing overweight has been a detractor. The managers offset all of this and more through stock selection alpha, which further demonstrates the quality of their approach, in our view.

With this in mind, we believe the trust slipping to a Discount in the near term belies the underlying quality of the management and process and could provide an opportunity. Furthermore, the direction of travel over the past few months, with AIE going from a small premium to a modest discount, stands in contrast to what has happened amongst peers, which have broadly rerated from wide to narrow discounts over the past year. In this period, AIE has considerably outperformed the sector average, and yet its rating relative to peers has considerably weakened, which we believe makes for a near-term relative-value opportunity.

Bull

• Long-term outperformance of all comparators, driven by superior stock selection
• Large and locally based research team provides critical on-the-ground insight
• Share price volatility has created a rarely seen discount

Bear

• India continues to trade at a premium valuation to emerging market peers
• Ongoing Middle East crisis hurts country highly dependent on oil imports
• Charges can be high when performance fee is earned

 
See the latest research on AIE here >

Disclaimer

 
Disclosure – Non-Independent Marketing Communication

This is a non-independent marketing communication commissioned by Ashoka India Equity. The report has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is not subject to any prohibition on the dealing ahead of the dissemination of investment research.