India-focused offshore funds, ETFs see outflows of $1.8 bn in 2012
India-focused offshore funds and ETFs had registered a cumulative net outflow of $1.8 billion during 2012, compared with net outflows of $5.4 billion in 2011, according to a report by Morningstar, a mutual fund tracker.
“Rupee volatility, coupled with macroeconomic concerns of a slowdown and ballooning deficit, weighed on sentiments, and resulted in outflows for most part of 2012 from the India focused offshore funds,” said the report.
Despite the outflows, assets of all India-focused offshore India funds and ETFs rose 19% during the year to around $37 billion, mainly due to market movement, as the Indian stock market rebounded strongly, said the report.
Overseas inflows into India in 2012 primarily flowed from emerging market funds, Asia-Ex Japan funds, BRIC funds and other global equity funds, according to Morningstar. “A large part of the inflows into the Indian stock markets also comes in via the route of such funds having partial allocation to India in their portfolios. A number of these funds have large assets under management, so inflows into these funds can translate into substantial inflows into Indian stocks,” said the report.
Emerging market stock funds was also a big contributor of flows into India in 2012. These funds have a decent allocation to India
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