Despite short term challenges, the funds are after India’s potential, which is 1.37 billion people with rising incomes, two-thirds of whom are under the age of 36
and expects India will account for up to 10 per cent of its assets in the next 15 to 20 years. The pension plan is eying public and private equity, real estate, infrastructure, health care and renewable energy investments.
Should small investors follow these funds? Yes, analysts say, as long as they’re patient, have a long-term horizon, and can live with the volatility that sees India’s economy move in fits and starts. “The longer-term factors haven’t changed,” she says. “India has the largest young population in the world. Gross domestic product per capita is a fraction of where it could be, so it wouldn’t take much for that economy to double in size.”
Mr. Adatia says while developed economies injected billions of dollars of stimulus to counter the pandemic, India couldn’t afford to do that. So, share prices rose less and have fallen less this year. Even so, both analysts think valuations are high relative to the shocks on the way. A big one is energy prices as India imports 85 per cent of its oil.