2 min read.Updated: 16 Aug 2021, 02:44 PM ISTLivemint
Despite net outflows from the India-focused offshore fund and ETF category, its asset base swelled during the quarter, thanks to the continued rally in the domestic equity markets
NEW DELHI: India-focused offshore funds and ETFs logged outflows for 13th straight quarter during April- June, as net outflows surged to $1.5 billion from $376 million in the previous quarter, according to a report by Morningstar India.
Offshore India funds are not domiciled in the country but invest primarily in Indian markets. Offshore mutual funds form an important component of total foreign institutional investments, apart from other large FIIs, such as offshore insurance companies, hedge funds, and sovereign wealth funds.
India-focused offshore fund segment experienced net outflows for the 13th quarter in a row losing $1.7 billion, which was higher than net outflows of $1.1 billion in the previous quarter.
“A positive indicator has been net inflows for the India-focused offshore ETF segment for the third quarter in a row. During the quarter, the segment received a net inflow if $153 million, which was lower than the net inflow of $767 million it received during the quarter ended March 2021 and $882 million during the December 2020 quarter," Morningstar India said in a report.
Moreover, over the last three quarters, India-focused offshore ETF segment has garnered a net inflow of $1.8 billion.
Despite net outflows from the India-focused offshore fund and ETF category, its asset base swelled during the quarter, thanks to the continued rally in the domestic equity markets. Through the quarter, the assets of the category grew 4.1% to $46.3 billion from $44.5 billion in the previous quarter.
“As the investor sentiment was dampened due to the second wave of covid-19 in India, higher number of funds experienced net outflows, and the fund which managed to garner net inflows experienced significant moderation," the report said.
Funds that recorded the highest net inflows during the quarter were: Ashoka India Opportunities ($191 million), iShares MSCI India ETF ($170 million), First Trust India NIFTY 50 Equal Weighted ETF ($63 million), iShares MSCI India ETF ($62 million), and Schroder ISF Indian Opportunities ($27 million).
India-focused offshore fund and ETF category has been witnessing consistent net outflows since February 2018. This had peaked March 2020 quarter, with $5 billion worth of outflows. This was the highest quarterly net outflows that the category ever saw.
Moreover, the net outflows from the category touched its peak in 2020 when it lost $9.3 billion of net assets.
According to the report, the intensity of outflows showed signs of moderation during the June, September, and December quarters of 2020, as well as during the quarter ended March 2021.
However, with the second wave of COVID-19 hitting Indian shores, the pace of net outflows once again shot up, and rather sharply, in India-focused offshore funds and ETFs category, the report showed.
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