ETFs have seen higher inflows than non-ETFs in February and most of the ETF inflows were GEM-dedicated, according to a strategy report by Kotak Institutional Equities. India has seen $995 million of inflows, driven by strong ETF inflows of $588 million. Global Emerging Markets funds saw an inflow of $533 million which was driven by ETF inflows of $360 million. In addition, India-dedicated funds saw $363 million of inflows that was dominated by non-ETF inflows of $243 million. Total FPI data as per NSDL and EPFR data show similar trends.
Brazil and India have seen the highest inflows, driven by strong ETF flows. Brazil and India saw strong inflows worth $1,425 million and $995 million, respectively in February, led by ETF inflows. On a 3-month basis, South Korea and China saw heavy redemptions of $3.5 billion and $2.5 billion.
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Allocations to India and China constitute more than a third of the average Asia ex-Japan fund portfolio. Allocation to India by Asia ex-Japan funds has marginally increased to 13.7% from 13.6% in January. Fund allocation to India by GEM funds were at 11% compared to 10.8% in January. Allocation by Asia ex-Japan ETF funds to India increased to 9.1% from 8.9% in the previous month. Allocation to India by GEM ETF funds has increased to 9.6%, from 9.3% in January.