Offshore India funds, ETFs register USD 1.1 bn inflow in Jan

New Delhi: India-focused offshore funds as well as Exchange Traded Funds (ETFs) witnessed a net inflow of USD 1.1 billion (over Rs 7,100 crore) in January, making it the highest inflow in 10 months, according to a report by Morningstar.

This comes following an inflow of USD 6.5 billion in these funds in 2017. Offshore India funds not domiciled in India receive flow from overseas investors and in turn, invest the money in Indian markets.

India-focused offshore funds and ETFs are a subset of the overall foreign portfolio investor (FPI) flows.

According to the report, India-focused offshore funds have seen an investment of USD 876 million in January, while ETFs witnessed an infusion of USD 224 million, translating into a total of USD 1.1 billion. This also marked the highest investment since March 2017, when such funds had received net inflow to the tune of USD 1.2 billion.

Generally, investment through India-focused offshore funds are long-term in nature while that of ETFs are for short term.

"Despite challenges, India-focused offshore funds continued to receive net inflows throughout 2017; whereas outflows have typically happened from India-focused offshore ETFs," Morningstar India Senior Analyst Manager Research Himanshu Srivastava said.

"The current trends are more of a short-term disruption rather than long-term structural changes. So, I am inclined to believe that the trend in India-focused offshore funds and ETFs will not be very different from what we have observed in the past," he added.