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.
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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.
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The percentage allocation to Indian equities fell across the board in the portfolios of all these three kinds of funds.