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International Universities to park funds in Indian market
By agencies
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Tuesday, 05 June 2007, 19:30 IST
Mumbai: Global educational institutions and Universities are investing a part of their huge endowment funds in Indian equity markets expecting high returns, reported The Business Standard.
Massachusetts Institute of Technology (MIT), which recently registered itself with the Securities and Exchange Board of India (SEBI) as a foreign institutional investor (FII) handles endowment funds worth about $8 billion that are mostly invested in the U.S, although the 18 percent of them is invested in international equity.
Washington University, University of Wisconsin, Singapore Management University, Nanyang Technological University, Singapore, Boy Scouts of America and Howard Hughes Medical Institute are also investing in the Indian markets.
MIT?s entry into India is significant considering that it is the largest University investment fund in the U.S, behind Harvad, Yale, Stanford and University of Texas and Princeton.
MIT?s endowments have given returns of 15.5 percent over the last 10 years. The NSE-50 and BSE Sensex have given compounded annual returns of 29 percent and 33 percent respectively over the last three financial years.
As the Indian Securities market is the fifth largest in the Asia-Pacific region after Japan, Australia, Hong-Kong and Korea in terms of market capitalization, the big universities are expected to park a portion of their funds here.
Usually five percent of the University?s endowments assets are spent every year and excess earnings are reinvested to supplement the endowments and to compensate for inflation and recession in the future. Endowment funds have also been created to support public, secondary and elementary school districts in several states.
?Universities in the US have a large amount of endowment funds and they want to diversify worldwide as it will reduce the risks,? L C Gupta, Director, Society for Capital Markets Research and Development and a former Sebi member board told Business Standard.