scorecardresearchETFs accounted for a third of record FPI outflows in June: Report

ETFs accounted for a third of record FPI outflows in June: Report

Updated: 01 Aug 2022, 12:00 PM IST
TL;DR.

The total outflows from exchange-traded funds (ETFs) tracked by EPFR Global, a data provider, stood at $2.6 billion, accounting for a third of capital outflows from the domestic market in June, a report by Business Standard stated.

The total outflows from exchange-traded funds (ETFs) tracked by EPFR Global, a data provider, stood at $2.6 billion, accounting for a third of capital outflows from the domestic market in June, a report by Business Standard stated.

The total outflows from exchange-traded funds (ETFs) tracked by EPFR Global, a data provider, stood at $2.6 billion, accounting for a third of capital outflows from the domestic market in June, a report by Business Standard stated.

The total outflows from exchange-traded funds (ETFs) tracked by EPFR Global, a data provider, stood at $2.6 billion, accounting for a third of capital outflows from the domestic market in June, a report by Business Standard stated.

Among these, India-dedicated funds saw outflows to the tune of $906 million in June, meanwhile, funds investing in global emerging markets (GEM) and other funds (such as those investing in Asia ex-Japan, BRIC and global markets) yanked out $997 million and $354 million, respectively, the report added.

"This indicates flows emanating from passive funds or exchange-traded funds (ETFs) are having a considerable sway on the domestic markets," BS said in its report. According to depository firm NSDL, total foreign portfolio investor (FPI) outflows from the domestic market stood at a record $6.4 billion in June.

One must note that the EPFR fund-flow data primarily tracks mutual funds, ETFs, closed-end funds, variable annuity funds, and insurance-linked funds. It does not include investments from hedge funds, proprietary desks, and sovereign wealth funds, which are tracked by NSDL.

The report also noted that the assets under management (AUM) of India-dedicated funds have declined 14 percent in the past one year to $36 billion. AUM of GEMs has declined 15 percent to $117 billion during the same period.

Meanwhile, according to the report, in the June quarter, India-dedicated funds saw outflows worth $1,603 million, whereas GEM funds witnessed outflows worth $1,459 million and other funds sold equities worth $662 million.

Similarly, in the past 1 year as well, India-dedicated funds saw the most outflows worth $4,607 million while GEM funds and other funds witnessed inflows worth $2,767 million and $222 million, respectively.

Exchange-traded funds, or ETFs, are mutual funds that are exchanged on a stock exchange which follow a commodity, an index or a portfolio of assets, such as an index fund. They have risen in popularity among investors searching for alternatives to mutual funds since their debut in 1993.

These products, which consisted of a basket of assets meant to replicate an index and offered minimal management costs and more intraday price transparency, were appealing to both institutions and consumers.

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First Published: 01 Aug 2022, 12:00 PM IST