Offshore India funds, ETFs mop up $573 mn in October

India-focussed offshore funds and Exchange Traded Funds (ETFs) are a subset of the overall FPI flows

India-focussed offshore funds received a net inflow of $573 million in October, taking the total to nearly $5 billion in 2017, indicating that the country remains an attractive destination for overseas investors.

In comparison, these funds had registered an infusion of $256 million in October last year, according to a report by Morningstar.

Offshore India fund - not domiciled in India - receives flow from overseas investors and in turn, invests the money in Indian markets.

India-focussed offshore funds and Exchange Traded Funds (ETFs) are a subset of the overall foreign portfolio investor (FPI) flows.

According to the report, India-focussed offshore funds have seen an investment of $573 million last month, while those of ETFs witnessed a pullout of $31 million, translating into a total of $542 million.

Flows into offshore funds are generally considered to be long-term in nature, whereas flows into ETFs indicate predominantly short-term money.

"The net inflow into offshore funds compared with the net outflow from offshore ETFs suggest that, despite concerns, foreign investors continue to view India as a long-term investment destination and their confidence on Indian markets and the country's economic prospects has not withered.

"It's also apparent that it is mostly the short-term money that is moving out of the Indian markets," Morningstar India Senior Analyst Manager Research Himanshu Srivastava said.