India’s downgrade comes as the long-only India portfolio, launched in July 2021, continues to lag its benchmark. The portfolio fell 7.4% in the September quarter in US dollar terms, compared with a 6.6% drop in the MSCI India Index.
For the first three quarters of 2025, it’s down 2.9%, underperforming the benchmark’s 0.5% decline. Still, since inception, the India portfolio remains a strong performer, up 81.6% compared with a 41.9% gain in the MSCI India Index and a 38.7% rise in the Nifty.
The shift in allocation appears influenced by China’s recent turnaround. The China long-only equity portfolio jumped 23.1% last quarter, beating both the MSCI China Index (up 20.8%) and the CSI 300 Index (up 19.9%). It has now surged 42% in the first nine months of 2025, outperforming the MSCI benchmark’s 41.8% rise.
Meanwhile, the Asia ex-Japan thematic portfolio—Jefferies’ longest-running strategy—rose 8% last quarter, underperforming the MSCI AC Asia ex-Japan Index’s 11.1% gain. The underperformance, Wood noted, stemmed from its “high exposure to India.” The portfolio’s Indian holdings fell an average 5.9% in US dollar terms in the quarter, while Chinese stocks surged 22%.
India currently accounts for 40% of the Asia ex-Japan thematic portfolio, compared with 33% in China.Despite short-term underperformance, Wood pointed out that the Asia ex-Japan portfolio’s long-term track record remains “satisfactory,” having gained 4,365% since its inception in 2002, well ahead of an 833% rise in the MSCI AC Asia ex-Japan Index.In its October 9 report, Chris Wood noted that a wave of FOMO is driving the US stock market, reflected in record valuations and soaring margin debt.
The S&P 500’s price-to-sales ratio has climbed from a recent low of 2.65x in early April to an all-time high of 3.49x, while US stock market margin debt has surged 33% year-on-year to US$1.06 trillion as of end-August.
Wood observed that the rally has been largely fueled by a staggering rise in AI and tech stocks. He cautioned that the market may be closer to the end of the AI-driven mania than its beginning, drawing parallels to the Nasdaq boom and bust, remarking that today’s setup resembles March 2000 more than 1995.
In response, GREED & fear plans to remove Nvidia from its global long-only equity portfolio, citing risks tied to high valuations and increasing circular deal-making. While acknowledging the move may be premature, the report noted that Nvidia has delivered an exceptional 595% gain since its inclusion in April 2023. The position will be replaced with an investment in Greek infrastructure firm Gek Terna.
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