India emerges as a top investment destination for Sovereign investors

Tags: Economy/Finance International News

According to a report of the American Asset Management company Invesco, India has emerged as the second most preferred investment market after the United States for sovereign wealth funds and public pension’s funds in 2022.

The Invesco Global Sovereign Asset Management Study is based on the opinion of 139 Chief investment officers of the sovereign wealth funds and public pension’s funds.

According to Invesco, the United States remained the top destination for the sovereign wealth funds and public pension’s funds but to balance the risk many fund manager wants to invest in the emerging markets. The most beneficiaries of this shift to the emerging market is India. 

Among emerging markets India has overtaken China as the most popular emerging market. This year China has been ranked at 6th place. 

One main reason has been that many funds are reducing their exposure in China and they are attracted to India due to its positive economic reforms and strong demographic profile.

According to the report  Sovereign investors  manage some $33 trillion in assets. Average annual returns for sovereign investors over the past decade stood at 6.5%. However, 2022 could prove to be a turning point with higher inflation and tighter monetary policy hitting long-term expected returns.

Sovereign Wealth Fund (SWF)

Sovereign means Government of a country. Thus sovereign wealth fund (SWF) is a fund owned by a Government of a country. It is normally a surplus money which a government has and it is used to invest in the stock or debt market of other countries for a better return on investment.

It is managed either by a company set up by the government or it is managed by the central bank of the country. 

There has been proposal to set up an SWF in India but till date no such fund has been set up.

SWF are considered as long term investors.

Some of the famous and largest SWF are: 

Norway Government Pension Fund Global, China Investment Corporation, Abu Dhabi Investment Authority.