Continues to deliver strong outperformance: Ashoka India Equity

AIE continues to deliver strong outperformance through its small- and mid-cap portfolio…by Ryan Lightfoot-Aminoff

Overview

This trust has been awarded a rating by Kepler Trust Intelligence for growth… Find out more

The large team at White Oak Capital that manage Ashoka India Equity (AIE), have capitalised on the low level of research in the growing small- and mid-cap area of the Indian market, to deliver exceptional returns over a number of periods, capitalising on not only the structural growth potential of the country but adding alpha on top through a bottom-up, stock selection process. AIE was awarded Kepler’s Growth rating for 2025 .

The board recently increased the maximum number of holdings allowed in the portfolio which has now grown to c. 160 names. This offers diversification benefits, allowing the managers to mitigate Portfolio risk by managing position sizes, which also ensures that stock selection drives performance. The board has also increased the allowance for pre-IPO companies to up to 15%. This has further increased the opportunity set available to the managers, and enables them to capitalise on the heterogeneous and fragmented market, including to companies on their way to listing. This area has the same issues of being under-researched and therefore offers considerable alpha potential for the managers. This has produced a number of positive contributors to performance recently.

Over the long-term, Performance has been excellent, with the trust delivering outperformance of its benchmark by a significant margin over the past five years and beyond. This has almost exclusively been driven by the very strong hit-rate in stocks they have selected, as well as the good performers contributing around double the positive returns that those that haven’t worked out have detracted.

In late 2024 and early 2025, the Indian market went through a slight pullback, with small- and mid-caps particularly affected. However, the managers note this may mean valuations are more attractive for those with a long-term view, having fallen back from their highs. They have made several additions to the Portfolio in light of this, although these remain driven by bottom-up stock selection factors with the majority of these additions being small- and medium-sized firms.

Analyst’s View

 
We believe AIE has been one of the investment trust sector’s great success stories of the past few years. Assets have grown considerably since launch in 2018, aided by excellent performance that has captured all of the growth potential of the Indian market, and delivered more on top, through a bottom-up, stock selection focus that has capitalised on the lower levels of research in the Indian market, particularly amongst small- and mid-cap stocks, due to their highly resourced and specialist analyst team (see Management).

In turn, this has led to the shares trading at a premium, allowing for share issuance in order to meet investor demand which has also helped assets grow. This, combined with the shareholder-aligned charging structure, has made AIE a standout trust for its fees (see Charges). There is no management fee with the team instead only paid for outperformance of the benchmark. We think the performance fee structure is an excellent way to motivate the manager to continually outperform. It does mean, however, that fees can be high when the trust performs particularly well, and we think this may be the case this year, given the outperformance seen so far. However, all the impact of the fees earned have been accrued in the NAV, therefore the strong outperformance already reflects the performance fee, which has the benefits of fully aligning the interests of manager and shareholders.

The Indian market has undergone a challenging period since peaking in September 2024. This appears to have hit a nadir in April 2025, with the market bouncing from the lows to date (28/08/2025). This period was particularly challenging for the smaller companies that AIE’s managers focus on, although this could arguably present a more attractive entry point on valuation grounds, with the long-term prospects for the country remaining intact due to the strength of the structural growth drivers.

Bull

• Very strong performance as a result of excellent hit rate, due to good stock selection
• Exposure to small- and mid-caps could offer greater long-term growth potential
• Sector diversification helps mitigate portfolio risk

Bear

• Whilst diversified by sector, trust does offer single country risk which could be exacerbated by tariffs
• Trust’s performance fee could be high following very strong performance
• Small- and mid-cap exposure could struggle more in a sustained downturn

 
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.