Indian pension fund managers may not yet have the regulatory approval to dabble extensively in stocks, but the unabated rise in domestic stock prices has certainly brought smiles to pensioners in The Netherlands, Norway and Denmark. State-run pension funds of these European nations have reaped significant benefits from their investments in Indian stocks and have significant sums invested here.
Together, pension funds such as The Netherlands’ ABP (Algemeen Burgerlijk Pensioenfonds), Norway’s The Government Pension Fund – Global (Statens pensjonsfond – Utland) and Denmark’s Lonmodtagernes Dyrtidsfond (LD Pensions) have invested over $1.2 billion (nearly Rs 5,000 crore) in India.
“We have been investing in Asian emerging markets since the mid-nineties. This has been done mainly through external managers,” Mr Thijs Steger, ABP spokesperson, told Business Line. Mr Steger said ABP’s exposure to Indian equities is around €700 million (Rs 4,000 crore). He added that ABP, which caters to 735,000 pensioners, has an exposure of five per cent in its portfolio to equity investments in the global emerging markets. Its total assets under management stood at $305 billion at the end of the first half of this year and delivered a return of 9.5 per cent in 2006.
Another similar-sized player with over $200 million (Rs 850 crore) invested in India, the Norwegian fund has investment in 58 Indian stocks including 17 Sensex stocks such as Bharti, SBI, Infosys and Reliance Industries. The fund, earlier known as The Petroleum Fund, was started in 1990 for management of the country’s petroleum revenues.
The fund is run by Norges Bank Investment Management, an arm of Norway’s central bank. “The Ministry of Finance is responsible for the management of the Fund. When it comes to investment strategy, this includes setting the benchmark and risk limits for Norges Bank’s management of the Fund,” said Mr Thomas Ekeli, the Oslo-based Investment Director of the Asset Management Department, Norwegian Ministry of Finance. Since 2007, the fund’s strategic equity allocation has increased to 60 per cent and its equity portfolio gave a return of 17 per cent in 2006. Mr Ekeli said the fund’s strategic asset allocation was based on the premise that capital markets are fairly efficient, and that the fund tended to adopt a very long investment horizon. He added that Norges Bank is given the freedom to take investment risk to beat relevant benchmarks. Overall, of its total assets of $300 billion, the fund has equity investments across 20 sectors, according to the data provided by the official. Norges Bank’s Foreign Exchange Reserves and Norway Government Petroleum Fund are registered as Foreign Institutional Investors with SEBI.