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Alternative investment strategies for pension funds

28, October 2017 | Vikash Singh

PE funds have become highly popular in the past two decades. Certain PE funds invest in diverse industries for spreading risks whereas some PE funds invest in specific industries only. A long-term horizon of around 12 years is one of the key features of PE funds. Moreover, they tend to close down once the fund period elapses. This is when the funds are distributed among its limited partners. Returns on investment in PE funds is much higher than returns through pension funds.

The other alternative investment strategy for pension funds is investing in hedge funds in India. Hedge funds with every passing day, especially since they offer the SIP route to invest now, have become extremely popular in the Indian markets. One of the best things about hedge funds is that they help largely in risk management through effective diversification of the portfolio.

Over the past couple of decades, India has become a highly popular PE investment destination owing to factors such as stable and policy-oriented central government and many other factors. These include favourable demographic dividend, growing middle-class, and higher levels of disposable income.

These factors have helped India largely in attracting foreign investments in the country through the PE and hedge funds route. Thus, PE and hedge funds are two of the best investment strategies for pension funds in India.

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