Strategy: Foreign fund-flow tracker, June 30, 2017 - Kotak

KIE's foreign fund-flow tracker gives a comprehensive view of the market flow by listed funds into India and its emerging market (EM) peers. These market participants are further classified based on their investment styles [passive (ETFs) or active (non-ETFs)] in an attempt to understand the intent and sentiments governing the flows. Please note there is a difference between EPFR reported fund flows and FPI flows reported by NSDL. EPFR fund flow data primarily tracks mutual funds, ETFs, closed-end funds and variable annuity funds/insurance-linked funds, whereas FPI flows reported by NSDL also capture investments from hedge funds, proprietary desks and sovereign wealth funds.

May month flow update -

- India flows-listed fund flows to India continued to be net buyers since the beginning of CY2017. India has received US$1.8 bn of inflows, driven by US$943 mn of ETF inflows and US$856 mn of non-ETF inflows. GEM funds saw US$988 mn of inflows, led by US$617 mn of ETF inflows. India-dedicated funds saw inflow of US$614 mn (driven by non-ETF inflows of US$476 mn).

- Emerging market flows-China has seen the highest inflows of US$2.4 bn in May, followed by South Korea and India, which have seen US$1.9 bn and US$18 bn of inflows. Flows were dominated by ETF. China, South Korea and India have seen US$1.9 bn, US$1.5 bn and US$943 mn of ETF inflows. Total FPI activity and EPFR activity showed similar trends for India, South Korea and Taiwan.

- Country allocations-allocations to India and China constitute more than one-third of the average Asia ex-Japan fund portfolio. Allocation to India by Asia ex-Japan funds has come down to 13.3% in May from 13.6% in April. Fund allocation to India by GEM funds remained around 11%. Allocation by Asia ex-Japan non-ETF funds to India came down to 13.9% from 14.2% in the previous month. Allocation to India by GEM ETF funds declined to 9.9% from 10% in April.

Source : Equity Bulls

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