India-focussed offshore funds, ETFs see withdrawal of USD 1.4 bn in Jul-Sep

India-focussed offshore funds and ETFs witnessed a net outflow of USD 1.4 billion (over Rs 9,900 crore) in July-September period of this year, making it the sixth consecutive quarter of withdrawal, a report has said.

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

Of the total outflows during the quarter under review, USD 1 billion was from India-focussed offshore funds, while USD 321 million was from India-focussed offshore ETFs, Morningstar Offshore Fund Spy report said.

In the previous quarter, the net outflow from offshore funds and ETFs was USD 941 million. Over the last one year period ended September 2019, the category has witnessed net outflows of USD 5.2 billion, it added.

India-focussed offshore funds and ETFs registered outflows for the sixth consecutive quarter.

During June 2018 quarter, the net outflow was pegged at USD 2,218.48 million, while it was USD 1,840.46 million in September 2018 quarter, USD 1,459.90 million in December 2018 quarter, USD 1,407.92 million in March 2019 quarter and USD 941.49 million in June 2019 quarter.

"Consistent net outflows dented the asset base of India-focussed offshore funds and ETFs. During the quarter, their assets fell to USD 49.1 billion from USD 52.9 billion recorded in the previous quarter," the report said.

As per the report, all three segments -- large-cap, mid-cap and small-cap -- performed negatively during the quarter ended September.

The S&P BSE Sensex was down 1.85 per cent in September quarter, while S&P BSE Midcap and S&P BSE Smallcap indices were down 4.76 per cent and 7.50 per cent, respectively.

The value of investment into Indian equities in foreign funds fell to an estimated USD 179 billion during the quarter ended September 2019 against USD 189 billion recorded in the previous quarter.

All three categories -- global, emerging market and Asia/Asia-Pacific -- of regionally diversified equity funds and ETFs turned out to be net sellers of Indian equities for the quarter under review, it said.