Offshore funds, ETFs see $500-mn inflows in May

India has received funds worth $3.6 bn so far this year

India-focused offshore funds and exchange-traded funds (ETFs) have pumped in over $500 million in May, taking the total to $3.6 billion so far this year.

An offshore India fund is one that is not domiciled in the country but invests primarily in its markets.

According to a report by mutual fund tracker Morningstar, India-focused offshore funds have infused a net amount of $360 million last month, while that of ETFs poured in $140 million, during the same period.

This comes following a total net inflow of $1.10 billion in April.

"Positively, more money continue to flow into India focused funds compared to India focused ETFs which signify long-term money. Flows into ETF are considered as short-term in nature," Himanshu Srivastava, Senior Analyst Manager Research at Morningstar India said.

In comparison, net inflow by Foreign Portfolio Investors (FPIs) in equities stood at $1.4 billion last month.

"The most prominent reason for the inflow is expectation from the government that it would speed up development and economic reforms in their last two years in office before going for elections in 2019. The government finalising GST rates and expectation that it will be rolled out on time in addition to forecasts of normal monsoon also led to positive sentiments," he added.

So far in 2017, India focused offshore funds have pumped in $2.7 billion compared to $895 million by India focused offshore ETFs, the report noted.