The manager has added a position in the JP Morgan Indian IT to his Rathbone Multi Asset Enhanced Growth fund, explaining that the market should do well if the China slowdown continues. "I bought some India on Friday for the first time," he said. "I was thinking about which markets might be beneficiaries of low commodity prices, as they will be thanks to China slowing down."
"Who could be a beneficiary? Well the Indian economy could be: they import energy rather than export."
"It’s a market that has underperformed and an economy that has been struggling and lagged global markets, and if China does slow down then it will be India, Japan and the UK which will benefit."
Coombs says he is investing in the country through the JP Morgan Indian IT, which is trading on a substantial discount to NAV of 13.4 per cent, according to the AIC.
The discount on the £419m trust has been widening over the past few years, which has helped depress share price performance.
Our data shows that investors in the trust have marginally beaten the MSCI India index over three years and underperformed over five.
Performance of trust vs index over 5yrs
Source: FE Analytics
However, in NAV terms the trust has marginally outperformed over five years, rising 26.27 per cent, according to the AIC, while the index has returned 25.77 per cent.
Coombs says investment trusts offer the best way to access the complicated Indian market.
"The Indian stockmarket is so volatile that an IT is the best structure, because it’s a volatile market and some parts are less liquid," he explained.
"Also, you have no restriction on share holdings, unlike with unit trusts."
Rule changes in the past year mean that investment trusts are not restricted in terms of the proportion of AUM they can hold in a particular stock.
Unit trusts and OEICs have a 10 per cent limit, but that has been removed on investment trusts, which only have to show they are diversified rather than observe precise figures.
Coombs explains that there are five stocks that make up more than 10 per cent of the Indian market, with Infosys the biggest at 13 per cent.
This means that investors holding a unit trust in the country are forced to take a certain underweight position to the index whether they want to or not.
Reliance and Tata are two of the other stocks that make up more than 10 per cent of the Indian index, but the JP Morgan trust currently has less than 10 per cent in both, as well as Infosys.
A 9.9 per cent position in HDFC Bank is the trust’s largest position.
Over the past decade the trust has made 623.64 per cent while the MSCI India index is up just 528.7 per cent.
This is substantially more than the only other trust with a record that long, Aberdeen's New India IT, which has made 349.24 per cent.
However, New India IT has outperformed the JP Morgan trust in share price terms over three and five years, according to our data.
Performance of trusts vs index over 3yrs
Source: FE Analytics
The JP Morgan Indian trust has ongoing charges of 1.49 per cent and does not currently employ any gearing.
Coombs says he has recently taken up a position in the Ignis Absolute Return Government Bond fund on his more cautious Rathbone Multi Asset Total Return fund.
Government bonds are out of favour after years of rising prices, but Coombs says they have a role to play in reducing the duration on his funds.
"We are preparing for the future rising rates; or really I suspect the market will change before they rise so we are preparing for the end of QE [quantitative easing]."
Coombs says that the volatility in the markets over recent days and weeks is an indication of how nervous investors have become about the possibility of the US Federal Reserve winding down its QE programme.
"We are de-risking our fixed income exposure and targeting zero duration," he said.
The £802m Ignis Absolute Return Government Bond fund targets positive returns in all market conditions and uses currencies and derivatives as well as bonds to achieve this.
The fund has made 12.14 per cent since it was launched in March 2011, according to data from FE Analytics, while the average absolute return fund is up 5.5 per cent.
Performance of fund vs sector since Mar 2011
Source: FE Analytics
The Ignis fund has an annualised volatility over that time of just 2.72 per cent, compared with 2.43 per cent for the sector average, which adds to its appeal for cautious investors.
It also has a low correlation to other asset classes, something that Coombs prizes as rare, as he told FE Trustnet in an earlier interview.
The fund has ongoing charges of 1.34 per cent and takes a performance fee of 10 per cent of the excess returns made over the SONIA benchmark.
The manager says that he has been reducing his holdings in high-yielding and defensive equity funds because that part of the market is now overvalued.
The manager has been increasing his weighting to cyclical funds instead.
