Bric – the term used to describe the emerging economic block that consists of Brazil, Russia, India and China – has had a deadening impact on how we assess the prospects of emerging markets. We now tend to lump these nations together into one generic region and ask “When will the Brics recover?” But in doing so, we conflate a huge range of diverse factors into one global force.

In reality, each of these countries has its own distinct pathway – which is why I am deeply uncomfortable about investing in China and Russia. Many equities in these two countries have no meaningful ownership claim on assets. I always defer to the greats of value investing when assessing risk and would simply repeat Warren Buffett’s observation that the investor should “look at stocks as part ownership of a business”. Would you want to share ownership with some of those Russian oligarchs or the Chinese Communist Party?

By contrast, I’m a growing fan of Brazil, even though it’s going through hell at the moment because of falling commodity prices. I’ve started investing in an exchange traded fund (ETF) that tracks the MSCI Latin America index. I respect Brazil’s democratic orientation, its legal culture and the debate it’s having about how to achieve a better social balance between rich and poor via a nascent welfare state.

India has always been a trickier one, though. Is India as big a manufacturing powerhouse as China? Of course not. Is it sclerotic, bureaucratic, and sometimes annoying? Absolutely! But, unlike China, it’s not a single play on the export of global manufactured goods, with a domestic consumption as an afterthought. India has a very strong consumer goods sector, powerful industrials, great infrastructure plays, loads of outsourcers, the inevitable tech stocks and more than a few resource companies. If you want a broader overview, I recommend the article by my fellow FT Money columnist Nick Louth at www.investorschronicle.co.uk/investmentguides.

So the challenge is how to capture this big theme over the next decade or so.

I’m always tempted by the simplicity of the ETFs tracking the CNX Nifty Fifty index, offered by the likes of Lyxor and db-x trackers. They are cheap and will capture the major market moves.

But the Indian markets are far from efficient – so I can’t help but think that, in India, active fund managers will provide real market-beating returns – or alpha. Then the question becomes: how to capture that alpha? One obvious answer is to buy into one of the many India-focused unit trusts.

However, I don’t like paying £1 for £1 of net asset value (NAV) in a unit trust – not when I can buy an equally well-managed investment trust for 90p or even 70p per £1 of NAV. That’s why I’ve been looking for India-focused investment trusts where I can buy at a discount to NAV and enjoy a lower total expense ratio than with a unit trust. I’ve come up with a three-way bet.

First, the India Capital Growth fund (IGC). It focuses on small caps (78 per cent of holdings) and some unlisted companies (10 per cent) in sectors such as textiles, packaging and transport. Admittedly, it’s had a rotten 12 months as its shares were hammered by the flight from risk. But, when confidence returns, I think these shares will shoot up (the discount to NAV is currently around 10 per cent).

Second, the Kubera Cross Border fund. I’m being more adventurous here, as this closed-ended fund takes a private equity approach to unlisted companies engaged in manufacturing and selling goods and services internationally. Some of its portfolio companies have had a rough old year – an Indian alloy wheels specialist got hammered last year – and I suspect that the fund will struggle to make much progress in the short term. Still, my hunch is that its well-
regarded management team will deliver on the long-term potential – provided it can navigate past some fairly vocal shareholder activists. They are demanding that some of the cash be returned. Kubera Cross Border is currently trading at 61c against NAV of 87c, of which 34c was cash, last time I checked.

Third, the JPMorgan India fund. It is offering a great medium-term option on overall growth in the Indian stock market via its recently-issued subscription shares – warrants by another name (see my online diary for more). These shares are effectively upside options on a volatile stock market through to 2014, giving you the right to transfer back into JPMorgan India ordinary shares at a predetermined price. In January 2014, for example, you can buy the ordinary shares – already trading at 10 per cent discount to NAV – at 291p compared with the current price of 337p. You can currently buy subscription shares for 111p. So, if the ordinaries double to say 670p – not impossible given a resurgent global economy – the warrants could be worth as much as 380p.

Obviously, all three of these funds will be disasters if emerging markets crash and burn over the next five years – but adventurous types who believe in India’s potential will be amply rewarded if I’m right.

adventurous@ft.com