Weary of corporate scandals, Indian fund managers outperform foreign rivals

An equal-weighted basket of Indian stocks with high domestic MF ownership and low foreign ownership outperforms a basket with the reverse profile.

India’s years of corporate scandals have honed the stock-picking skills of the nation’s fund managers to a point where they can now consistently beat the choices of foreign peers and retail investors.

An equal-weighted basket of Indian stocks with high domestic mutual-fund ownership and low foreign ownership has been outperforming a basket with the reverse profile over the past two years, according to data compiled by Bloomberg. Local fund managers have become more adept at using knowledge of the companies, the government and economic climate to avoiding pitfalls.

“Experience with past governance issues shows that domestic mutual funds have skirted