See heavy outflows in the March quarter, reflecting the Indian markets’ poor performance during the period.
While the Indian mutual fund industry struggled with consistent net outflows, India-focused offshore funds came under pressure in the March quarter. Fund flows in the two major universes where India-focused funds are available, domiciled in Europe and Japan, witnessed large net outflows during the period.
An offshore India fund is not domiciled in India, but invests primarily into Indian markets. According to a report from Morningstar India, a fund tracker firm, India-focused funds recorded a net outflow of euro 418 million ($600 million) in the March quarter, compared with a robust net inflow of euro 623 million ($894 million) in the December quarter. Similarly, those domiciled in Japan saw a sixth quarter in a row of net outflow, of ¥841 million ($10.4 mn).
| OUTFLOWS FROM EUROPE-DOMICILED INDIA-FOCUSED OFFSHORE FUNDS DURING JANUARY-MARCH, 2011 | |
| HSBC GIF India Equity | $575.75 mn |
| JP Morgan Funds-JF India Fund | $231 mn |
| CS ETF on MSCI India | $64 mn |
| Parvest Equity India | $58.86 mn |
| DWS India | $58.86 mn |
| OUTFLOWS FROM JAPAN-DOMICILED INDIA-FOCUSED OFFSHORE FUNDS DURING JANUARY-MARCH, 2011 | |
| PCA India Infra Open | $48.52 mn |
| Nomura India Equity | $46.42 mn |
| Amundi Resona India Fund | $30.9 mn |
| Daiwa Dynamic India Equity Fund | $15.84 mn |
| Shinko Pure India Stock Fund | $15.26 mn |
| Source: Morningstar Direct | |
LAGGARD IN ASIA
India’s benchmark sensitive index was one of the bottom performers within the Asian region during the quarter. The Indian indices fell a little more than five per cent, on concerns of monetary tightening and rising inflation. “India-focused offshore funds, therefore, fared poorly and not a single fund managed to close the quarter in the green,” said the report.
More, total net assets of offshore equity funds in Europe declined 12 per cent. In Japan, the assets shrunk three per cent.
HSBC GIF Indian Equity, the largest offshore India fund in the euro zone, registered the biggest net outflow of euro 401 million ($575.75 million) during the quarter. From Japan, PCA India Infra Open saw the largest net outflow of ¥3.91 billion ($48.5 million).
According to the report, the average return delivered by all offshore India-focused equity funds (in Mornigstar's database) was minus 7.11 per cent. It added: "India was among the bottom performing markets globally during the quarter and this would have attributed to the outflows from India-focused offshore funds in Europe. Further, outflows from emerging market funds in general during the quarter on account of risk aversion would have also contributed to the lack of interest in Indian equities abroad."
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Interestingly, exchange traded funds (ETFs), too, have not been spared. India-focused ETFs saw large outflows during the March quarter, too.
Among the top 30 largest funds with partial allocation to India, the iShares MSCI Emerging Markets Index ETF saw a steep outflow of about $577 million from India during the quarter.
Other India-related ETFs which recorded the biggest outflows from the country during the period under review were iPath MSCI India Index ETF (outflow of $255 million) and WisdomTree India Earnings (outflow of $71 million).