UniSuper Management is considering investing in India as Prime Minister Narendra Modi pushes sweeping economic reforms to lure investors.
The Mebourne, Australia-based superannuation fund, which manages more than A$50 billion ($39 billion), might invest as much as A$200 million in Indian equities through a fund manager or exchange-traded funds, Chief Investment Officer John Pearce said in an interview.
“India has the potential to be the next big thing,” Mr. Pearce said. “The reform agenda in the country, onus on growth, policy certainty for businesses will aid sentiment for Indian equities.”
Unisuper's plan to invest in the South Asian nation ties in with its move to increase Asian holdings as slowing earnings in the developed world bring back the attention to emerging countries. India's stocks and currency are among the world's best performers on bets that Mr. Modi will shift spending from subsidies to infrastructure to overhaul an economy now starting to take off as China slows.
The country's economy is projected to expand as much as 8.5% in the next fiscal year, according to the latest Finance Ministry estimates, the fastest pace among the world's largest emerging markets. Mr. Modi's 9-month-old administration has also vowed to make it easier to do business by cutting red tape and simplifying taxes.
Unisuper might also buy insurance on its equity holdings through stock options for the first time ever amid rising global stock prices, Mr. Pearce said. It has previously bought such protection for its currency positions, he said.
“It could be a put option or a collar or a put option on equities, bonds or even currencies to balance it out,” Mr. Pearce said. “We are working out the process and timing to activate such an insurance.”