Is it true that India based ETFs have been selling out of India in the recent past?
Answer
Answer
Exchange traded funds investing in India are normally macro funds and give the best picture of short term shifts in the sentiments of global investors. India focused ETFs combined with offshore funds saw outflows of $1.50 billion in the Jun-20 quarter.
It may be recollected that earlier in Mar-20 quarter, India based ETFs had seen $5 billion outflows, taking the total outflow to $6.50 billion in the first half of the year. This is substantially higher than the $5.9 billion outflows seen for the full fiscal 2019.
Why are ETF flows important to an economy? While long only funds give a picture of the long term attractiveness, ETFs give the best picture of short term money flows. Clearly, the flows have been tepid in the last few months due to COVID and the weak rupee.