Kotak Institutional Equities: Strategy: Foreign fund-flow tracker, June 2024

Fund flows in May 2024. Listed funds witnessed US$2.2 bn of inflows, led by ETF inflows of US$2.1 bn. India-dedicated funds witnessed inflows of US$2.8 bn, broken down into US$1.4 bn of ETF inflows and US$1.4 bn of non-ETF inflows, whereas GEM funds saw US$363 mn of outflows, led by non-ETF outflows of US$804 mn, which was offset by US$442 mn of ETF inflows.

Emerging market flows. Listed emerging market fund flows were mixed. China, Brazil and Thailand witnessed US$4.9 bn, US$472 mn and US$166 mn of outflows, whereas India and Taiwan saw US$2.2 bn and US$1.1 bn of inflows, respectively. Total FPI and EPFR activity showed divergent trends for India and South Korea.

Country allocations. Allocations to China and India constitute 42% of the average Asia ex-Japan fund portfolio. Asia ex-Japan funds' allocations to India increased to 19.4% in May from 19.2% in April, whereas allocations to India by GEM funds increased to 18.9% in May from 18.8% in April. Allocations by Asia ex-Japan non-ETFs to India increased to 19.8% in May from 19.6% in April; allocations to India by GEM non-ETFs remained stable at 16.8%.

Product description and methodology. 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 flow. Please note that 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 NSDL-reported FPI flows also capture investments from hedge funds, proprietary desks and sovereign wealth funds.

Source : Equity Bulls

Keywords

KotakInstitutionalEquities Strategy ForeignFundFlowTracker June2024