As sovereign wealth funds plan to increase investment into emerging markets over the long term, India remains a top choice, according to Atlanta-based asset manager Invesco, which published a poll of 97 such institutions last month.
India has emerged as a favorite emerging market with SWFs due to consistent growth in GDP and rapid urbanization. The country scored a rating of 7.1 among respondents in 2017, significantly higher than the 5.7 rating that emerging markets received overall.
Private real estate and private equity are in SWFs’ crosshairs as publicly listed investments have relatively low coverage of the country’s wider economy. For example, stock market capitalization is 65 percent of GDP in India, compared with 146 percent in the US and 112 percent in the UK.
Yet, concerns remain over governance and liquidity of investments in emerging markets. Sovereigns noted in the Invesco report that local management teams are best equipped to deal with these concerns. In one example in February, the Qatar Investment Authority committed $250 million to Mumbai-based ArthVeda Fund Management, which will invest the capital in Indian affordable housing.