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India-focussed offshore equity funds in Europe registered a net outflow of €418 million (Rs 2,683 crore) during the January-March 2011 quarter, according to a report by Morningstar, an international rating agency for mutual funds.
The Sensex during the January-March period brought negative returns of 5.43 per cent. FII statistics for the same period show a net outflow of Rs 4,451.1 crore.
‘Challenge'
On account of being risk averse, several offshore emerging market funds saw heavy outflows for the quarter ended March 2011, said the report.
However, calendar year 2010 saw net inflows of €1.6 billion (Rs 10,272 crore) into India-focussed offshore funds.
“FII inflows have reduced and flattened over the period (January-March 2011),” said Mr Surajit Misra, Executive Vice-President and National Head-Mutual Funds, Bajaj Capital.
“Retail money that had been coming in through the offshore funds has reduced. Overall, it is a challenge and this will continue until significant growth and positive confidence comes back into the economy.”
The total net assets (TNA) of offshore India equity funds in Europe dropped by 12 per cent during the first quarter of 2011 to €21.38 billion (Rs 137 crore).
The total net assets had grown by about 42 per cent in 2010 for these funds.
The highest net outflow was seen in case of HSBC GIF Indian Equity, the largest offshore India fund during the same quarter.
Out of the total net outflow of Rs 2,683 crore from Eurozone, the HSBC GIF Indian Equity fund alone saw estimated net outflows of €401 million (Rs 2,574 crore).
This is the fourth consecutive quarterly outflow for this fund. For the year ended March 2011, HSBC GIF Indian Equity registered the biggest estimated net outflow of €728 million (Rs 4,673 crore).
Market share
The assets of HSBC GIF Indian Equity fell by about 18 per cent over the one-year period ended March 2011.
Its market share dropped by 27 per cent in the last one year from 26.72 per cent in March 2010 to 19.51 per cent at the end of March 2011.
JP Morgan Fund — JF India Fund — saw the second highest, however relatively lower, net outflow of €154 million (Rs 988 crore) over one year, primarily because of the €161-million (Rs 1,033 crore) net outflow in January-March 2011.
FF – India Focus recorded the largest inflow of €132 million (Rs 847 crore) during the quarter.
The assets of the second largest India offshore fund within Europe — Aberdeen Global Indian Equity Fund — grew by 24 per cent in the last one year, with the fund receiving good inflows and also managing a decent performance over the same period. Among the largest 10 offshore India funds within Europe, Franklin India clocked the highest growth rate (in percentage terms) of almost 57 per cent over the past one year (ended March 2011).
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