India-focused funds lose 60% of 2023-24 inflows; metal outflows ease: Elara

Overseas investors continue to reduce their exposure to India-focused funds even as they return to US equities, signalling a shift in global capital allocation amid changing preferences within the artificial intelligence (AI) investment theme, according to a report by Elara Capital.

 

The report said India-focused funds have witnessed net outflows of $9 billion since the beginning of calendar year 2026, even as US equity funds attracted $27 billion of fresh inflows during the latest week, more than offsetting the $25 billion withdrawn over the previous two weeks. The divergence underscores investors' preference for US markets despite continued caution towards emerging market allocations, including India. 

India outflows persist despite US equity rebound

 

India-focused funds have borne the brunt of the recent selling, with $7 billion redeemed from long-only funds and another $2 billion from exchange-traded funds (ETFs) so far this year. According to Elara Capital, the withdrawals come after India-focused long-only funds attracted nearly $20 billion between March 2023 and October 2024, of which almost $12 billion has now been redeemed, including $7 billion in CY26 alone.

 

The report noted that Luxembourg accounted for the largest share of India-focused fund redemptions at $3.5 billion, followed by the United States ($2.4 billion) and Japan ($2.1 billion), while Ireland remained the only major fund domicile to largely avoid the current wave of selling.  CHECK Stock Market LIVE Updates 

AI investment theme narrows as investors turn selective

The report also pointed to a shift in the global AI investment narrative. The broader AI ecosystem trade continues to lose momentum. GEM funds, which had increasingly become a proxy for the AI value-chain trade, continue to witness outflows. At the same time, foreign investors have resumed buying dedicated South Korea and Taiwan funds following the correction witnessed during April and May, albeit at a much slower pace than during the peak of the AI rally.

 

"The AI trade is becoming concentrated in a few direct beneficiaries rather than the broader ecosystem," said Elara Capital.

 

Brazil continued to witness persistent redemptions, signalling a loss of momentum in the commodity-led leg of the AI investment cycle.

 

Elsewhere, precious metals showed early signs of stabilisation. Gold funds recorded $317 million of inflows, their first positive week after cumulative outflows of nearly $14 billion since April, while selling pressure in silver funds has also eased over recent weeks.

 

Among sector-specific funds, global industrial funds continued to witness much slower inflows compared with the strong momentum seen since April 2025. Real estate, meanwhile, has emerged as a new area of investor interest, attracting $3.4 billion over the past nine weeks, according to Elara Capital.