Offshore India funds, ETFs register USD 565-mn inflows in November

India-focussed offshore funds and Exchange Traded Funds (ETFs) witnessed net inflows of USD 565 million in November and helped the overall tally to reach nearly USD 6.5 billion in 2017, reflecting confidence of overseas investors in Indian markets.

In comparison, these funds had seen a pull out of USD 674 million in November last year, according to a report by Morningstar.

Offshore India funds not domiciled in India receive flow from overseas investors and in turn, invest the money in Indian markets.

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

According to the report, India-focussed offshore funds have seen an investment of USD 501 million last month, while those of ETFs witnessed an infusion of USD 55 million, translating into a total of USD 565 million.

This also marked the highest investment since June, when such funds had received net inflows to the tune of USD 738 million.

Flows into offshore funds are generally considered to be long-term in nature, whereas flows into ETFs indicate predominantly short-term money.

Assets coming through India-focused offshore funds are long term in nature, compared to India-focused offshore ETFs as the later is less expensive and offers easy exit option, Morningstar India Senior Analyst Manager Research Himanshu Srivastava said.

"Pleasingly, through 2017, India-focused offshore fund consistently received net inflows into offshore funds, indicating that the confidence of long-term investors on Indian markets has not withered enough in testing times. The money that moved out was largely short term in nature," he said.