Shift in super focus

India is set to benefit from a shift in Australian superannuation fund attitudes to investing in Asia, according to research conducted by the University of New South Wales's Australian School of Business.

The study of 20 superannuation funds and similar institutions revealed that investment in India is expected to increase significantly as respondents indicated they are set to move into country-specific mandates from 'Asia as a whole' mandates, associate professor John R Evans said.

Respondents stated they would increase their investment in India to 28 per cent of their total Asian (non-Japan) investment, up from a previous 15 per cent, while allocation to mainland China would remain steady at 55 per cent of total allocation.

The super funds and institutions had aggregate assets of about $207 billion.

"The majority of participants regard Asian investments as being part of their overall equity allocation," Evans said.

"The current allocation to Asian investments is about 2.5 per cent of total assets, but institutions plan to increase their allocation marginally to 2.8 per cent.

"Institutions expect nominal return from Asian investments of almost 9 per cent per annum, and almost 2.5 per cent per annum better than the more developed market returns."

He stated obstacles to investing in Asia include corporate governance, legal enforceability and contractual issues.