INDIA - Pension funds from around the world are now eyeing up investments in India due to fading interest in Europe and the US, according to industry experts.
More than 15 or the world's top 20 global pension funds had now made investments in the country and registered with the Securities and Exchange Board of India (Sebi) within the last eight months.
It is understood some of the funds were already Limited Partners in India-focused private equity funds and explained other pension funds might decide to take the asset management route into the country.
One reason for schemes wanting to invest in the country was because of less stringent regulation by the exchange board.
Last October, it had allowed pension funds to register even if they were not regulated by their domestic securities market regulators.
But with the Bombay Stock Exchange's benchmark Sensex being more than 40% off its peak so far this year, some experts are concerned about investing in such a volatile market.
Aberdeen Asset Management Asia managing director Hugh Young said: "Indian equity markets are likely to stay volatile, as sentiment remains captive to deteriorating economic growth and worsening corporate earnings.
"While it is among the least trade-dependent economies in the region, we are concerned about inflationary risks, which could remain persistently high over the coming months, due to the government's recent fuel price hike and soaring global commodity prices."
Young explained this might have negative implications for economic growth. He said the Reserve Bank of India's aims to lower inflation may require a sterner response, which in turn could cause a sharper slowdown.
He added: "While we remain comfortable with India's long term prospects, we remain cautious in the short term in light of these economic headwinds."
However, Watson Wyatt global head of investment consulting Roger Urwin said changing pension fund needs and globalisation were forcing firms to innovate and refocus.
He said: "There is no let up in the demand for alternative assets as pension funds seek to diversify their portfolios."
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Defined benefit (DB) schemes are to be offered a new consolidator as the former chief of the Pension Protection Fund (PPF) launches 'The Pension SuperFund'.
Martin Freeman has been hired as head of technology product and development at Smart Pension, to support the 'growing' technology product side of the business.
Tim Sharp says the government has missed some big opportunities to help workers in the DB white paper.