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Business News/ Money / Personal Finance/  Asset base of India-focused offshore funds, ETFs swells despite outflows
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Asset base of India-focused offshore funds, ETFs swells despite outflows

There have been three consecutive quarters of increases in the asset base, starting with the March quarter, when the category's asset base decreased by 40% to $29.8 billion from $49.4 billion recorded in December 2019.

Photo: iStockPremium
Photo: iStock

The sharp surge in the Indian equity markets has boosted the asset base of India-focused offshore funds and exchange-traded funds (ETFs) in the December quarter, as their asset size rose by over 19% to $42.9 billion against $36 billion in the previous quarter. This was despite this segment witnessing a combined outflow of $986 million during the quarter, a Morningstar report that was released on Tuesday said.

There have been three consecutive quarters of increases in the asset base, starting with the March quarter, when the category's asset base decreased by 40% to $29.8 billion from $49.4 billion recorded in December 2019.

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“Of the overall current asset base of $42.9 billion, India-focused offshore ETFs accounted for $8.9 billion (compared with $6.5 billion at the end of the previous quarter), whereas India-focused offshore funds accounted for $34.0 billion (versus $29.5 billion in September 2020).

However, the percentage allocation of these funds in the total offshore fund assets of Indian equity markets fell to 15% from 17% during the quarter ended September 30.

India-focused offshore funds and ETFs are some of the prominent investment vehicles through which foreign investors invest in Indian equity markets.

However, there was no respite for the India-focused offshore fund and ETFs category as it continued to witness net outflows during the quarter ended December 2020.

“Through the December quarter, the category lost net assets worth $986 million, which was much lower than the net outflow of $1.8 billion recorded in the previous quarter. This was the category's 11th consecutive quarter of net outflows," the report said.

For 2020, the category witnessed a net outflow of $9.3 billion, which was higher than the net outflow of $5.8 billion that the category witnessed in 2019.

In terms of break-up, the India-focused offshore fund segment registered the 11th consecutive quarter of net outflows to the tune of $1.9 billion during the quarter ended 31 December 2020.

However, India-focused offshore ETF segment witnessed a divergent trend as it received net inflows after five consecutive quarters of net outflows. “During the December 2020 quarter, the segment witnessed a robust net inflow of $882 million as against the net outflow of $218 million in the previous quarter," Morningstar report noted.

This is the highest quarterly net inflow in this segment after the net inflow of $1.2 billion recorded during the quarter ended June 2015.

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Published: 10 Feb 2021, 04:37 PM IST
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