July 05 2020
India-focused offshore funds see outflows
22 July 2011

With the Indian markets underperforming peers in the Asian region, India-focused offshore funds continued to record net outflows (difference between sales and purchases). India-focused offshore funds in Europe registered a net outflow of 346 million euros ($497 million) in the second quarter of 2011, bringing the year-to-date net outflow to more than 700 million euros ($1billion). Sensex has lost 8.7% so far in the year, the second worst performance among key indices in 10 largest markets in the world, according toBloomberg data. 

Offshore India funds in Japan registered the seventh consecutive quarter of outflows, bringing the year-to-date net outflow to 31.6 billion yen ($403 million). The net outflow in the second quarter of 2011 rose to 30.8 billion yen, from 800 million yen in the previous quarter , data compiled by Morningstar India, an investment research firm showed. 

India-focused exchange traded funds (ETFs) and funds domiciled in the US continued to see net outflows during the quarter ended June 2011, but the quantum of outflows did drop compared to the previous quarter. 

Among the 30 largest funds with a partial allocation to India , Carmignac Patrimoine A, saw the biggest portfolio outflow from India (of about $155 million) during the quarter. The fund that recorded the biggest portfolio inflow into India during the quarter was Vanguard Emerging Markets Stock Index, which invested $197 million. 

The Morningstar global emerging markets equity category recorded a net outflow of 5.6 billion euros during the second quarter after registering almost an equivalent outflow in the previous quarter. 

The total net assets of offshore India equity funds available for sale in Europe dropped by more than 5% during the second quarter, bringing the year-to-date fall in assets close to 16%. Total net assets had grown by 42% in 2010. 

HSBC GIF Indian Equity, the largest offshore India fund, registered the biggest estimated net outflow —165 million euros—during the quarter. This is the fifth consecutive quarterly outflow for this fund, bringing the year-to-date outflow to 567 million euros. Franklin India recorded the largest net inflow (60 million euros) in the second quarter of 2011. The fund has also recorded the greatest net inflow among all offshore India funds in Europe over one year. 

Offshore India-focused equity funds declined 1.75% (in dollar terms) on an average during the quarter. However, over 80% of the funds managed to outperform the MSCI India Index. While sensex lost more than 3% (in rupee terms), the MSCI India USD index closed with losses exceeding 4%. 

Funds with greater exposure to consumer stocks outperformed as investors flocked to defensive plays when markets turned volatile. The topperforming offshore India fund was a consumer-themed fund from Japan –Osakan India Consumer Related Equity Open, which returned 6.39%. 

Japanese investors, however , pulled out money from emerging-markets equity funds during the quarter, Morningstar data showed. The total net assets of 'Offshore India funds' in Japan continued to shrink, falling by about 10% during the quarter ended June 2011, after falling by 3% the previous quarter.



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