India-focussed offshore funds and exchange-traded funds (ETFs) witnessed the sixth consecutive quarter of outflows, losing net assets worth $1.4 billion during the quarter ended September 2019, according to a study.
As per the latest study by Morningstar, the outflow was higher than the net outflow of $941 million during the previous quarter. Over the last one-year period ended September 2019, the category witnessed net outflow of $5.2 billion.
This assumes significance as India-focussed offshore funds and ETFs are some of the prominent investment vehicles through which foreign investors invest in Indian equity markets.
As per the report, these funds witnessed net outflow of $1 billion through the quarter while the ETFs, that saw net inflow of $384 million in the previous quarter, saw a net outflow of $321 million for the quarter ended September 2019. The continued net outflows dented the asset base of these funds and ETFs, with the assets falling to $49.1 billion during the quarter, from $52.9 billion recorded in the previous quarter.
The outflows come amid an overall negative trend in equity markets as the benchmark Sensex fell 1.85% during the quarter with the broader indices, representing mid-cap and small-cap segments, shedding 4.76% and 7.5%, respectively.
All three categories — global, emerging market and Asia/Asia-Pacific — of regionally diversified equity funds and ETFs were net sellers of Indian equities for the quarter ended September 2019.
The percentage allocation to Indian equities fell across the board in the portfolios of all these three kinds of funds.
