India has emerged as one of the world’s fast-growing economies. Today, with a vast workforce and rising prosperity, India is just getting started.
As sub-advisor to Canada’s oldest India fund, the Sun Life Excel India Fund, Aditya Birla Sun Life AMC is on the ground in India, tuned into the local culture and market movers.
Why invest in India?
Three main drivers of India's growth
Still growing strong
With a young, well-educated workforce of over 750 million people1, prosperity is rising as India is set to become the world’s second-largest economy by 2030 (PPP).2
By 2050, India is anticipated to have the largest workforce in the world with 926 million people3. This will dramatically increase consumption and personal wealth. Moreover, as India grows richer, it will attract foreign capital and increasingly generate opportunities to create wealth.
Working population (age 20-59 years) in 2050
- India – 926 million
- China – 610 million
- Europe – 315 million
- US – 188 million
Government reforms – opening the door to investors
Since 1991, successive Indian governments have introduced financial reforms, with improved governance, giving investors increased certainty.
Recent reforms, including the introduction of a GST tax and changes to the bankruptcy code, have demonstrated the government’s continuing commitment to improving India’s economic fundamentals and creating a foundation to support the next leg of growth.
Source: Ministry of Statistics, Government of India. * FDI = Foreign Direct Investment; Vishesh Sanchar Nigam Limited (VSNL) Bhartiya Janta Party (BJP) led coalition (NDA) and Indian National Congress led coalition (UPA).
Growing consumer spending
Consumer spending is expected to grow from $1.5 trillion today to nearly $6 trillion in the next 11 years.3
India is already one of the fastest-growing consumer markets in the world. In fact, over the past seven decades domestic consumption has doubled.4
*As at February 2018
† Based on units sold in the fiscal year ended March 2018
4Source: Industry research, ‘The New Indian’ – BCG report, March 2017
Indian equities can help enhance diversification
An allocation to Indian equities can help diversify portfolios with a low correlation to other global asset classes, to help reduce the overall risk of a portfolio.
As the chart below shows, over the long-term when Indian investments were added to a Canadian equity portfolio, it increased the return potential of the portfolio over the period.
Return potential generated by adding Indian equities to a hypothetical Canadian equity portfolio
(Based on % weightings over 10 years)
Source: Morningstar Research Inc.; based on the 10-year periods from December 2009 to December 31 2019. All returns in C$. Canadian equity portfolio represented by the S&P/TSX Composite Index; Indian equities by the MSCI India Index. For illustrative purposes only. Past performance is no guarantee of future results. Actual results would have been different. You cannot invest directly in an index. A Sharpe ratio combines a risk measurement and a return measurement into a single number to determine a fund’s risk-adjusted return. A higher value is better.
1.. Source: United Nations World Population Prospects, 2017
2. Source: Standard Chartered, in purchasing power parity exchange rate terms.
3. Source: World Economic Forum, January 2019.
Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus before investing. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated.
© Sun Life Global Investments (Canada) Inc. Sun Life Global Investments (Canada) Inc. is a member of the Sun Life Financial group of companies.
Opinions and commentary provided by Aditya Birla Sun Life Asset Management.
Learn about the opportunities in one of the worlds fastest growing economies.
Aditya Birla Sun Life AMC
Portfolio Manager Atul Penkar from Aditya Birla Sun Life AMC, subadvisor to our Sun Life Excel India Fund, discusses his views on the current market environment.
Sun Life Excel India Fund: Growing strong with India for 22 years
Launched on April 14, 1998 by Aditya Birla Sun Life AMC, the Sun Life Excel India Fund celebrates its 22nd birthday in 2020. The Fund is actively managed to capitalize on the exciting growth opportunity offered by the expanding Indian economy. It offers the potential for long-term capital growth and portfolio diversification beyond developed markets.
See what 22 years of active management in India looks like.
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