Answer extracted from the The Single Source podcast — listen to the full episode below.
How should global investors allocate to a high-conviction India strategy within a diversified portfolio?
Treat India allocation as a high-conviction alpha sleeve rather than passive beta exposure, since most global portfolios already hold India through emerging market funds or indices. Size this allocation for the long term, recognizing that India has delivered equal or superior returns compared to major portfolio holdings while offering genuine alpha generation.
Most investors assume their emerging market allocations already provide sufficient India exposure. In reality, this passive beta approach differs fundamentally from a concentrated, actively managed India equity strategy. As Nisheh Goel explains in the episode, the distinction matters because it changes how you think about sizing and positioning the investment.
The reason this distinction is critical lies in performance dispersion within the Indian market itself. Nearly 50% of businesses in the BSE 500 index are down over 30% from their highs, even as the broader index trades only marginally below its 10-year average valuation. This massive gap between index-level pricing and individual stock performance creates the operating ground for true alpha generation—something a benchmark-tracking exposure cannot capture.
Underwriting conviction through a disciplined framework
Duro Capital's approach demonstrates how to operationalize this alpha thesis. The firm maintains a concentrated portfolio of 15 to 20 positions, with the top 10 holdings representing 70–75% of assets under management. This concentrated structure is possible because every company is underwritten to a rigorous 25% return hurdle, meaning the firm only commits capital to opportunities it believes can deliver meaningful outperformance over the holding period.
This discipline extends across three pillars: defensible competitive positioning (what Goel calls the "why" of a business), structural tailwinds that enable multi-year earnings expansion (the "why now"), and entry price below intrinsic value (the "how"). The specificity of this framework is what separates high-conviction alpha allocation from casual India exposure. A point detailed in this podcast, this approach scales to emerging market mandates across institutional portfolios, where position conviction typically determines allocation size.
"There is a significant amount of pessimism when it comes to India today. And I do think that pessimism is largely in the price."
Nisheh Goel — Chief Investment Officer, Duro Capital. With over 15 years managing institutional capital into India through multiple market cycles, Goel leads a concentrated India equity strategy at Duro Capital, where the firm's 88%+ active share reflects a portfolio construction fundamentally different from emerging market indices. His track record demonstrates significant outperformance by identifying structural compounders trading at dislocations.
The pessimism Goel references is not idle sentiment—it has structural roots. 2024 and 2025 marked the first consecutive years of negative foreign outflows from India in over a century, creating genuine price dislocations. Yet simultaneously, earnings growth has bottomed and the Indian government has delivered on major structural reforms. Historically, every time India has underperformed other emerging markets, that reversal has occurred within 12 months without exception.
Sizing an India allocation for the long term means accepting that it will outperform the portfolio's broader emerging market exposure on average, while understanding that the path will include periods of underperformance relative to other markets. As discussed in the full conversation, this is why treating India as a distinct alpha sleeve—separate from index-tracking EM exposure—becomes a structural portfolio decision rather than a tactical bet.
See also
What historical pattern has characterized India's performance relative to other emerging markets?
Historically, every time India has underperformed other emerging markets, that underperformance has reversed within 12 months—a pattern that has held consistently across multiple market cycles.
How does active share differentiate a concentrated emerging market fund from benchmark indices?
Duro Capital operates with active share over 88% and consistently above 85%, creating a portfolio that looks fundamentally different from consensus emerging market benchmarks and passive index exposure.
Why has pessimism in emerging market pricing created a compelling entry point?
Significant pessimism regarding India is largely reflected in current prices, particularly after 2024 and 2025 became the first consecutive years of negative foreign outflows in over a century, creating genuine valuation dislocations.
Key takeaways
- Distinguish India alpha strategies from passive emerging market beta—most global portfolios already hold India exposure through EM indices.
- Nearly 50% of BSE 500 constituents are down over 30% from highs, while the index trades near historical averages, creating dispersion-driven alpha opportunities.
- Concentrated positioning (15–20 holdings, each underwritten to 25% return hurdles) enables conviction-based sizing aligned with long-term structural tailwinds.
- Foreign outflow reversals and earnings growth rebounds, combined with government reforms, historically precede India's multi-year outperformance rallies.