After 17 consecutive quarters of net outflows, India-focused offshore funds and ETFs witnessed net inflows during the quarter ended September 2022. This trend has continued since then, with the category now witnessing five consecutive quarters of net inflows, revealed a study by Morningstar.
An offshore India fund is one that is not domiciled in India but invests primarily in the Indian equity market.
India-focused offshore funds and exchange-traded funds (ETFs) registered the highest-ever quarterly inflow of $7.97 billion in the September quarter, according to the Morningstar India report. In the June quarter, this category got a net inflow of $3.19 billion.
Morningstar has included the asset flows of mutual funds and exchange-traded funds (ETFs) with an allocation to Indian stocks as of September 2023.
“Robust net inflows and a strong rally in the Indian equity market drove the asset base of the India-focused offshore fund and ETF category to swell by 18.2% to $59.8 billion from $50.6 billion in the previous quarter,” said Melvyn Santarita of Morningstar.
After a strong rally in the June 2023 quarter, the Indian equity market inched up across the board in the quarter ended September 2023. The S&P BSE Sensex registered a gain of 1.71% through the quarter, S&P BSE Midcap Index surged by 12.39%, and S&P BSE Small Cap Index appreciated by 15.21%.
The asset base of India-focused offshore fund and ETF category surged by 18.9 percent in the quarter to $59.8 billion from $50.6 billion in the previous year.
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In the quarter ended September 2023, the S&P BSE Sensex Index registered a gain of 1.71% through the quarter. However, the mid- and small-cap segments were the major beneficiaries. While the S&P BSE Midcap Index surged by 12.39%, the S&P BSE Small Cap Index appreciated by 15.21%.
The India-focused offshore funds and ETF category and MSCI India USD Index delivered similar returns during the quarter ended September 2023 at 2.9%.
Out of the universe of 285 India-focussed funds under consideration, 107 managed to outperform both the category average and the MSCI India USD Index during the quarter ended September 2023.
