High-level delegation of US pension funds to visit India next week

These funds with $1.8 trillion AUM are looking to bet big on India

A delegation of high-level executives from US public pension funds (non-profit and government sectors) is visiting India next week to assess and familiarise themselves with the investment opportunities in the country. These executives belong to various American states and cumulatively represent $1.8 trillion in assets under management (AUM) invested across the US and global markets.

 

The United States (US) mission to India, which includes its embassy and consulates and the Department of Treasury, along with India’s Ministry of Finance and the National Investment and Infrastructure Fund (NIIF), is hosting the delegation.

 

The roadshow called “Building financial futures” will be held between September 9 and September 13. The delegates will visit Delhi, Bengaluru, and Mumbai where they will meet experts from various sectors, including technology in Bengaluru), banking and financial sector (public and private market) in Mumbai, and government officials in Delhi.  

 

The US altogether has about 200 public pension funds. Five executives from five pension funds will be part of next week’s delegation.

 

“This is the first time the US Mission has organised a delegation of funds in this fashion.  India represents a range of opportunities in sectors like infrastructure, clean energy transition, urban planning and infrastructure, decarbonisation, ports, aviation, health care and pharmaceuticals. Our goal is to expose these pension fund representatives to the opportunities in India,” said US Consul General Mike Hankey. 

Global firms are trying to make their supply chains more resilient by reducing their reliance on any one country and diversifying their manufacturing bases. “As companies make these decisions, the money to facilitate them will also flow. India is one of the countries that firms could pivot to,” said Hankey.

 

US institutional investors already have investments worth $50 billion in India. The US government, through its Development Finance Corporation, has invested around $4 billion here.

 

“All investment decisions will be made by the individual fund administrations.  These fund executives will evaluate the Indian market and make decisions based on their individual strategies and risk profiles,” said Hankey.

The investment opportunity for pension funds is huge. “Institutional investors wish to invest at scale, an opportunity that India can offer across real assets, transportation, energy, digital, climate, and so on. Over the next 10 years, we see an investment opportunity of $700-800 billion,” said Sanjiv Aggarwal, chief executive officer and managing director, NIIF. He further said that with India’s macroeconomic situation improving, the risk of currency depreciation, an issue for institutional investors earlier, is not significant anymore.

 

Currently, the US is the largest jurisdiction for foreign portfolio investment (FPI) flows into India with assets under custody of Rs 32 trillion. Industry experts say a substantial portion of these could be assets owned by pension funds.

Pension funds in the US invest via the active fund route and through exchange-traded funds (ETFs). They give mandates to popular US funds, such as Fidelity, Pimco, Invesco and Templeton, to invest in global markets. They also invest via popular indices such as MSCI All Country World Index (ACWI).

In 2023, the Federal Retirement Thrift Investment Board (FRTIB), one of the US government’s main retirement funds with overall assets of over $600 billion, had decided to switch the benchmark index its uses for investing in global equities from the MSCI EAFE (Europe, Australasia, and the Far East) index to the MSCI ACWI Investible Market Index (IMI) ex-USA ex-China ex-Hong index. The move was seen channelising inflows of $3.6 billion into the domestic market as India was not part of the MSCI EAFE index.