Synopsis
In 2024, India-centric offshore funds and ETFs recorded an impressive net inflow of $23.4 billion despite a net outflow in the December quarter. Factors contributing to this performance include political stability, strong earnings, and increased global interest in Indian markets.Key Takeaways
- Record net inflow of $23.4 billion in 2024.
- Despite net outflows of $954 million in December.
- Strong performance driven by political stability.
- Increased weightage of India in global indices.
- Foreign investments boosted by large IPOs.
New Delhi, Feb 19 (NationPress) India-centric offshore funds and exchange-traded funds (ETFs) achieved a remarkable net inflow of $23.4 billion in 2024, even after experiencing a net outflow of $954 million during the December quarter.
As reported by the financial services company Morningstar, from July to December, these funds and ETFs attracted net inflows totaling $5 billion. Of this amount, offshore funds garnered $4.6 billion while ETFs accumulated $391 million.
In the September quarter, India-focused offshore ETFs experienced net inflows of $1.1 billion but faced net outflows of $716 million in the December quarter.
Despite a challenging market landscape, the asset base of India-focused offshore funds and ETFs saw a slight growth from July to December 2024, increasing from $102.3 billion in June to $103.4 billion in December 2024—a modest rise of just 0.01 percent.
The report highlighted that, between July and September, FIIs were actively purchasing, driven by political stability following the NDA government’s third consecutive term, a stronger-than-expected June-quarter earnings season, and the commencement of the U.S. Federal Reserve’s rate-cut cycle in September 2024.
Factors such as an increased India weightage in global indices, enhanced domestic growth forecasts, and a boom in large IPOs further propelled foreign investments.
Offshore mutual funds are a critical element of total foreign institutional investments, alongside other major FIIs like offshore insurance firms, hedge funds, and sovereign wealth funds.
The path of future inflows will likely be shaped by global influences such as inflation trends, the global economic growth outlook, the U.S. Federal Reserve's stance on interest rates, geopolitical issues, and economic conditions in the U.S. and Europe.
U.S. trade policies with the rest of the world will significantly affect foreign investor flows.
Importantly, India-focused offshore funds and ETFs serve as the main channels for foreign investors to engage with the Indian equity markets,” the report stated.
