Strategy: Funds Flow tracker, May 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.

April month flow update —

- India flows—listed fund flows to India continued have remained positive since the beginning of CY2017. India has received US$1.9 bn of inflows, driven by non-ETF inflows of US$1.1 bn and ETF flows of US$0.8 bn. India-dedicated funds saw strong inflow of US$932 mn (driven by non-ETF inflows of US$668 mn) while GEM funds saw US$602 mn of inflows (dominated by ETF inflows of US$373 mn).

- Emerging market flows—India received strong inflows of US$1.9 bn in April, similar to that of China which also had US$1.9 bn of inflows, led by ETF inflows of US$1.2 bn. On a 12-month basis, China saw heavy redemptions of US$5.7 bn. Total FPI activity and EPFR activity show similar trends for most countries.

- 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 remained around 13.6%. Fund allocation to India by GEM funds declined marginally to 11.1% from 11.2% in March. Allocation by Asia ex-Japan ETF funds to India were at 9.4% in April compared to 9.6% in March. Allocation to India by GEM ETF funds increased to 10%% from 9.9% in March.

Source : Equity Bulls

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