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Intereffekt India Warrants is called Intereffekt Active Leverage India from 2 November 2015.
Intereffekt Active Leverage India invests in derivatives. The goal of the fund is to obtain a position on the financial markets in India. The fund is aiming at a leverage of 2 to 3 times the return on the underlying values. Its investment policy will be aimed primarily at achieving capital growth (the fund will not pay any dividends). The risk profile is high, due to investments being channeled into the emerging markets of India. The manager will not use a benchmark as a gauge for the purposes of determining investment policy or comparing the results achieved by the fund.
Intereffekt Active Leverage India is a subsidiary fund of Intereffekt Investment Funds N.V. (IIF), established with a so-called umbrella structure.
The Indian financial markets had a flying start in 2017. The Nifty index rose by 4.6% in rupee. As the rupee weakened in January, the increase amounted to 3% in euro. Due to this increase the index was able to break out of the downward trend that started in September 2016. After a brief throwback to test the 200-day average, the index was able to resume its upward trend to close on 31 January at 8561. The move in the index has had no impact on the leverage in the fund. Notwithstanding the fund continued to maintain a leverage of two.
The positive performance was driven by positive macroeconomic data in January. After disappointing data in December, the data in January were much better. In December, industrial production was disappointing and the Central Bank (RBI) announced no rate cut. Industrial production rebounded in January from -1.9% YoY to a growth of 5.7% YoY. A positive development, which was accompanied by a slight rise in inflation from 3.15% to 3.39% YoY. Economists also expect the RBI to cut interest rates on February 8. This is not a foregone conclusion, because the expected rate cut in December was not accepted by the RBI. With an interest rate cut the RBI aims to lift economic growth to a higher level.
It will be a challenging year for the Indian financial markets. It is expected that the recovery in growth of corporate earnings is delayed until the second half of the year. This will keep upward pressure on inflation, as prices of industrial raw materials and oil are in a rising trend. Due to this the RBI probably can make fewer cuts in interest rates than they would like. The implementation of the GST (General Service Tax), the election results in some states and the 'Union Budget "are the main events that can determine the direction of the market in 2017. The most important question concerning abroad focuses on the United States. What effect does Trump's foreign policy has for emerging markets? With the slogan "America first" Trump has sent a clear signal to the rest of the world. Protecting the private economy and the recovery of jobs can paralize work for the entire Asian region. Many products are produced for the developed economies in Asia. This makes that many Asian countries are export dependent. Should the US reduce its imports from China, this will be felt mainly in Taiwan and South Korea. The consequences will be less than average for India, but the IT sector and to a lesser extent, the pharmaceutical industry will be affected. In general, the balance between positive and negative effects as a result of the change of power in the United States are in balance for India.
Market Monitor / Trading model
No rights may be derived from this publication. You are referred to the prospectus and Key Investor Information Document for the fund's terms and conditions. These documents may be obtained from the website or the address mentioned below. The manager of IIF has obtained a licence for this fund from the Netherlands Authority for the Financial Markets in accordance with the provisions of the Financial Supervision.