Offshore India funds, ETFs get net inflow of $230-mn in Mar qtr

Fund inflows into India-focused offshore funds and exchange-traded funds (ETFs) declined sharply to USD 230 million in January-March this year against net infusion of USD 1.03 billion in the previous quarter, says a Morningstar report.

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 as well as ETFs are a subset of the overall foreign portfolio investor (FPI) flows.

Investment in India-focused offshore funds reached USD 262 million in the January-March quarter, while investors pulled out USD 32 million from ETFs, translating into net inflow of USD 230 million, according to the report.

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

"The net inflows into India-focussed offshore funds compared with net outflows from India-focussed offshore ETFs suggests that, despite concerns and some hiccups along the way, foreign investors by and large 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," Himanshu Srivastava, senior analyst at Morningstar Advisers India said.

According to the report, assets of India-focussed offshore funds and ETFs rose to USD 70 billion during the quarter ended March 31, 2018, from USD 65 billion registered in the previous quarter.

During the March quarter, foreign portfolio investors (FPIs) pumped in USD 2.2 billion in the Indian equity market on hopes of better corporate earnings, promising economic data and buoyant global markets.

The net inflow by FPIs stood at USD 2.6 billion during October-December quarter.