Most individuals don’t have the time or desire to sift through annual reports, earnings call transcripts, and industry trade publications to find the next great investment idea. They’d rather turn their money over to professionals or invest in index funds. In most instances, I suggest passive investors invest in a handful of broad market index funds through a systematic investment program (Wealthfront, Betterment, and Future Advisor are great online platforms which automate the process). One way to beat the market over time is to increase exposure to the market during severe (20%+) corrections. History shows that the nominal value of the market has never failed to recapture prior peak levels. Having the proper temperament over a long period of time can produce superior returns.
For those investors seeking a bit more alpha, there are a handful of good funds to invest in. I’m not a thematic investor by any means, but having lived in India for 2 years, I am optimistic about the country’s long term prospects. A young working population, vibrant democracy (exhibited by last year’s election), a once in 50 years leader, a culture focused on education (particularly science and engineering), a high savings rate, rising consumption, and continued adoption of free market policies could result in a golden era for the Indian economy over the coming decade.
North American investors don’t have any easy way of trading Indian stocks. They must either be an Indian citizen with an overseas account or go through an expensive broker.
Now, there’s an opportunity to invest in India alongside one of the great investors of our time. Prem Watsa, proprietor of Canada’s Fairfax Financial, recently launched Fairfax India Holdings, a publicly traded SPAC which will invest in Indian companies, public and private. Fairfax will own 30% of the vehicle with a 10 year lockup. Moreover, the fees are quite reasonable for such a vehicle – a 1.5% management fee and 20% performance fee after a 5% hurdle rate. I particularly appreciate the 5% hurdle rate because it guarantees investors a 5% return before Fairfax is paid, similar to the Buffett partnerships. A high watermark also applies.
I’m attaching the investor presentation and long form prospectus. The sections on India are particularly insightful.
I worked with TD Ameritrade to get the ticker symbol added to their system. The subordinated voting shares trade on the Toronto Stock Exchange under ticker: FIH.U. The CUSIP number is 303897102. If you can’t purchase shares online, you should be able to call in and have a broker execute the trade.
As a disclaimer, investors should read the prospectus and understand the risks before investing in this vehicle.