The first quarter returns of Sensex (in US dollar terms) have been the lowest among its BRIC (Brazil, Russia, India and China) peers, what with global investors taking money off the local stock market.

According to the fund flows data put out by EPFR Global, India Equity Funds saw a net outflow of over $358 million during the quarter, third worst among the major emerging market equity fund groups. BRICs and China equity funds fared worse, recording a net outflow of $2.3 billion and $1.6 billion respectively.

While Sensex lost about 4.5 per cent during the quarter, Hang Seng and Bovespa ended the quarter on a flat note.

Russia's RTS however gained by about 17.2 per cent.

The other notable trend in fund flows during the quarter was a shift in investors' preference in favour of developed markets and sector level funds that invest in commodities and energy.

India Equity Funds reported a net outflow of $358 million (about Rs 1,600 crore) for the quarter as against a net inflow of $130 million (about Rs 580 crore) seen in the same quarter last year.

Interestingly, India isn't the only fund group that saw a reversal in its fortunes. Funds based on Brazil and Greater China (mainland China, Taiwan, and Hong Kong) too registered similar trends. Such funds reported net outflows this quarter vis-à-vis inflows seen last year.

Flight of capital towards developed markets and concerns regarding high inflation clouding the growth prospects in emerging markets seem to have driven this trend.

BRICs saw a net outflow of $2.3 billion as against $932 million inflows seen in the year-ago quarter.

Overall, emerging markets recorded a net outflow of $25 billion in the March-2011 quarter as against $11.4 billion inflows enjoyed last year.

Russia Equity Funds, however, bucked the trend, attracting $3.6 billion inflows, largely led by the growing confidence of the country's commodity uptrend. Relatively lower valuation of Russian stocks and the fact that the country is also the world's largest oil producer outside West Asia and Africa acted in its favour.

Incidentally, Russia Equity Funds have managed to take in fresh money in all but two of the 26 weeks since the beginning of the December-2010 quarter, absorbing just under $5 billion during that run.

It, however, merits note here that Russia funds had enjoyed inflows even in March-2010 quarter, netting in about $1.4 billion then.

Frontier Markets was the only other fund group that saw inflows.

Developed markets saw a significant rise in inflows, though concerns about the impact of higher energy prices on inflation, interest rates and growth sapped the momentum somewhat in March.

Developed market equity funds netted in about $57 billion during the quarter, making it the best start to a year since they absorbed $63.3 billion during March-2006 quarter.

Among country-based developed market funds that saw inflows were US (about 32 billion), Japan (about 3.3 billion) and Western Europe (about 2.8 billion).

In terms of sector-based funds, energy sector funds and commodity sector funds were the biggest money magnets, taking in over $10.9 billion and $9.6 billion inflows during the quarter that saw gold prices hit fresh record highs and some grades of oil commanding over $110 a barrel.

This also translated into inflows for countries outside West Asia and Africa that have big reserves of energy and commodities.

This may explain why the flows into Russia and Canada Equity Funds during the quarter were 104 per cent and 101 per cent of their full-year records.

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