HNIs increase exposure to offshore investments

Folios held by HNIs under offshore funds catergory rose 15% in six months

India’s rich are increasingly looking at investment opportunities outside the country.

As per data on the Association of Mutual Funds in India (AMFI) website, the number of folios held by high networth individuals under the offshore funds category rose by 15% in the six-month period ending September 2013.

This is in contrast to the 11% drop in folios that was seen in the previous six-month period ending March 2013.

The total number of folios held by HNIs as of September stood at 10.12 lakh, up 8% from March 2013. The rise has largely been led by an increase in debt folios in the liquid and money market category.

Analysts said that the turmoil in the domestic equity markets had caused HNIs to move investments from domestic equity funds to offshore funds. Offshore funds, or fund of funds overseas (FoFs), are equity funds which invest in funds across geographies.

Most fund houses have funds with a focus on US equity markets, which have given much better returns on the back of a US economic recovery as the jobs and manufacturing data improved.

Fund houses are also looking at launching other FoFs focusing on other markets experiencing a turnaround like Japan and Europe.

With very little retail participation in the domestic mutual fund market, fund houses are also increasingly looking at catering to the HNI community.