India-focused equity funds was the worst performer among BRIC (Brazil, Russia, India and China) markets and witnessed an outflow of $4.08 billion in 2011, as compared to an inflow of $1.35 billion in 2010, according to data complied by the international fund tracking firm EPFR Global.
As per market experts, investors in India funds were mainly worried about high fiscal deficit, inflationary pressures and rising interest rates.
Apart from India, funds dedicated to China also saw an outflow of $3.74 billion, while Russia and Brazil-focused funds also recorded net withdrawals. Overall, the emerging markets equity funds registered an outflow of $47.7 billion this year, reversing half of 2010's $96 billion of inflows, on account of sovereign debt crisis in euro-zone and fears of a global slowdown. The EPFR said that emerging markets saw heavy outflow " as headwinds from Europe, uncertainty about China's prospects next year and stubbornly high levels of inflation in many countries kept investors on edge." During entire 2011, developed market equity funds registered outflows of $124 billion, which is much higher than $66 billion pulled out in 2010.
This was attributed to worst performance of the US equity funds which alone witnessed an outflow of $76 billion. In contrast, Japan equity funds managed to attract capital worth $1.35 billion during 2011, the bulk of which came prior to the earthquake in March. Overall, the global market equity funds registered outflows of $31.3 billion in 2011, as against an inflow of $8.62 billion in 2010. EPFR said that the commodity sector funds posted inflows of $13 billion, thanks to the $8 billion committed to funds specialising in gold and precious metals. In addition, funds focused on sectors such as consumer goods, real estate, utilities took in capital worth $2.31 billion, $3.79 billion and $3.78 billion respectively. On the other hand, fund groups focused on healthcare, energy and financial sectors, experienced redemption ranging from $524 million to $2.65 bllion.