Flows into offshore funds are generally considered to be long-term in nature, whereas flows into offshore ETFs indicate primarily short-term investments.
India-focused offshore funds and ETFs are some of the major investment vehicles through which foreign investors invest in the Indian equity market.
India-focused offshore funds and exchange-traded funds (ETFs) saw a quarter-on-quarter decline of 9 per cent in the January-March period, mainly due to the uncertain global economic environment, according to Morningstar. 803 million in the March period. Report. However, it was the third consecutive quarter of inflows. Earlier, such funds had seen net outflows in 17 consecutive quarters.
India-focused offshore funds and ETFs are some of the major investment vehicles through which foreign investors invest in the Indian equity market.
As per the report, the category received net inflows of USD 803 million during the January-March quarter of 2023, slightly lower than the net inflows of USD 884 million during the quarter ending December 2022.
Flows into offshore funds are generally considered to be long-term in nature, whereas flows into offshore ETFs indicate primarily short-term investments.
Going forward, investors will also take cues from the outlook emerging from the global inflation and economic growth front and the US Federal Reserve’s decision on interest rates, the report said.
In addition, valuations of Indian markets, growth in the domestic economy, and currency movements will also be key drivers that will determine the trend of flows into the India-focused offshore funds and ETF category.
During the three months ended March 2023, the India-focused offshore fund segment witnessed net inflows of USD 314 million, as compared to net inflows of USD 384 million received in the previous quarter. This was the third consecutive quarter of net inflows for the segment. Prior to this, in the last 17 quarters, starting with the quarter ended June 2018, it saw net outflows.
The recent flows come despite challenging times and an uncertain global economic environment. However, compared to other economies, the Indian economy and markets have been resilient. In addition, there is a positive economic growth outlook for India, which has attracted foreign investors to invest in Indian markets with a long-term outlook, as noted in the report.
In addition, India-focused offshore ETFs also received net inflows, and volumes were higher than the India-focused offshore funds segment. It received net inflows of USD 489 million, marginally lower than the net inflows of USD 500 million recorded in the previous quarter.
During the quarter ended March 2023, their asset base declined by 1 per cent to USD 42.4 billion from USD 42.9 billion recorded in the previous quarter.
Of the overall current asset base of US$ 42.4 billion, India-focused offshore ETFs account for US$ 9.69 billion, while India-focused overseas funds account for US$ 32.74 billion.
Meanwhile, Indian equity markets moved south during the quarter ended March 2023 on weak global cues, raising concerns about the Federal Reserve’s continued accommodative policy hike in rates and its impact on global economic growth.
During the quarter, the S&P BSE Sensex index declined 3.04 per cent, the S&P BSE Midcap index declined 4.93 per cent and the S&P BSE Smallcap index declined 6.81 per cent.
(This story has not been edited by News18 staff and is published from a syndicated news agency feed – PTI,
