Assets of international funds investing in India increase by 19% in June quarter

The report also suggested that the India-focused offshore ETFs also received net inflows of $764 million, sharply higher than the net inflows of $489 million recorded in the previous quarter.

Of the overall current asset size of $50.6 billion, India-focused offshore ETFs accounted for $11.5 billion, whereas India-focused offshore funds accounted for $39.05 billion. The Morningstar report suggested that the market shares of India-focused offshore ETF and India-focused offshore funds in the overall category remained unchanged from the previous quarter at 22.8 percent and 77.2 percent, respectively.

There has been a sharp drop in the number of funds in the category witnessing net outflows, and the quantum of net outflows, which points towards a strong positive trend and sentiments among foreign investors towards Indian equity markets after a long gap.

The assets of the 10 largest India-focused offshore funds and ETFs shot up by 21 percent during the quarter ended June 2023, to $20.7 billion from $17.1 billion in the previous quarter. These funds account for almost 41 percent of the India-focused offshore fund and ETF category's assets.

During the June 2023 quarter, Kotak India Midcap A USD Acc received the highest net inflows of around $487 million, a huge jump in its net inflow numbers from the previous quarter when it received a net inflow of $55 million. This quarter witnessed a strong performance from the mid- and small-cap segments, and the fund benefited from this trend in the form of huge net inflows.

It was followed by SMDS High Growth India Mid-Cap Equity and iShares MSCI India ETF USD Acc, with net inflows of $297 million and $237 million, respectively.