India-Focussed Offshore Funds, ETF Saw Net Outflows For 8 Consecutive Quarters

During the quarter ended March 2020, all three segments like large cap, mid cap and small cap performed poorly. The S&P BSE Sensex declined by 28.5 per cent, S&P BSE Midcap and S&P BSE Smallcap indexes clocked negative 29.4 per cent and negative 29.9 per cent, respectively. The massive drop in equity markets has decreased the asset base of India-focussed offshore funds and an Exchange-Traded Funds (ETFs). As per the Morningstar Offshore Fund Spy report for quarter ended March 2020, the India-focussed offshore funds and ETF through the quarter, lost net assets worth $5 billion, compared with the net outflow of $2.1 billion in the previous quarter. 

The India-focussed offshore funds and ETF category has continued to witness net outflows during the quarter ended March 2020. This was the eight-consecutive quarter of net outflows for the category. Till now the category has lost $16.3 billion of net assets since the quarter ended June 2018. That said, the India-focussed offshore funds and ETF category were down -31.6 per cent during the quarter, whereas the Morgan Stanley Capital International (MSCI) India US Dollar Index declined by 31.1per cent.

“The value of investment into Indian equities in foreign funds tumbled to an estimated $134.5 billion during the quarter ended March 2020 against $199.5 billion recorded in the previous quarter. All three categories - global, emerging markets and Asia/Asia-Pacific of regionally diversified equity funds and ETFs were net sellers of Indian equities for the quarter ended March 2020,” notes the report. That said, the assets of other regionally diversified equity funds and ETFs dropped sharply to $5.21 trillion as of the quarter ended March 2020 compared with $6.8 trillion recorded in the previous quarter.