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India-focused offshore funds, ETFs invest $140 mn in August

With this, total inflow has reached to over $5.3 billion in the first eight months of the year

Press Trust of India  |  New Delhi 


India-focused equity and have registered a net investment of $140 million in August, making it the lowest inflow for the category this year so far, according to a Morningstar report.

With this, total inflow has reached to over $5.3 billion in the first eight months of the year.

The fund -- not domiciled in -- receives flow from overseas investors and in turn invests the money into the Indian

According to the report, India-focused equity registered net inflow of $179 million, while India- focused exchange-traded funds) posted net ouflows of $39 million, taking the total to $140 million.

In comparison, the total inflow stood at USD 561 million in July, while it was $350 million in January.

"ETF category is under stress. The good part is, though in lesser quantum, the money is still flowing in and that too in focused which are more long-term in nature than focused ETF, which are short term in nature," Himanshu Srivastava, senior analyst manager research at Morningstar said.

Srivastava attributed the lower inflow to rising geopolitical tension mainly due to stiff stand-off between the US and North Korea and profit booking.

"Indian stock have done significantly better over the last few years. This coupled with rupee appreciation has given overseas investors a good profit booking opportunity. If seen from the perspective of global risk aversion, for them it is a good opportunity to capitalise on," he added.

Going ahead, Srivastava said geopolitical risk is the major factor that may have adverse impact on foreign flows. If the tension between the US and North Korea continues or aggravates, this will increase the geopolitical risk and in that condition, the outflow may continue.

First Published: Sun, September 24 2017. 14:54 IST