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Allocations to India move up even as Chinese allocations reach record highs.
KIE’s foreign fund-flow tracker gives us a comprehensive view of market flow activity in
India and among its emerging market peers. Using a top-down approach, we analyze
country flows and the underlying factors which affect them, such as fund flows and
country allocations for different fund types.
Country flows: Indian inflows worth US$1.78 bn in the past three months
Foreign flows into India continue as the past four weeks witnessed net inflows worth US$169 mn
within the EPFR universe of funds. Inflows to most of the EM region remained positive even
though Korea and Taiwan witnessed net outflows worth US$194 mn and US$64 mn respectively.
Russia saw the largest inflows for the month amounting to US$634 mn followed by Indonesia and
Brazil. On a three-month basis, largest inflows were witnessed by China (US$4.8 bn) and Brazil
(US$3.0 bn). Indian inflows amounted to US$1.78 bn during that period where ETFs accounted for
US$1.1 bn of the flows.
Country allocations: India allocations by Asia ex-Japan improve while Chinese allocations dominate
Indian allocations continued their uptrend to 10% from their recent lows of 9.2% in December
2011. On an mom basis, this is a 0.2% improvement over January 2011. Allocations to China by
Asia ex-Japan funds and GEM funds have reached record highs based on the data consolidated by
EPFR (since June 2005). GEM funds have ~30.6% exposure in China while China makes up ~20%
of the Asia ex-Japan exposure.
Fund flows: No significant trend available even as Vanguard MSCI EM ETF continues to flourish
No significant trend emerged from the underlying funds which constitute the EPFR universe as
activity of ETFs and non-ETFs remained mixed. Aberdeen Global India Equity Fund witnessed the
largest inflows in the India-dedicated universe of funds even as iShares S&P India Nifty Index Fund
ramped up its AUM to US$345 mn in recent times. Emerging market funds (ETFs and non-ETFs)
continued to witness strong inflows as EM funds of Aberdeen and Oppenheimer saw inflows
worth ~US$450-500 mn each. Yet again, most of the funds were overshadowed by the Vanguard
MSCI EM ETF which witnessed another month of inflows (US$728 mn) taking its 12-week tally to
US$5.7 bn. Currently, Vanguard MSCI EM ETF AUM stands at ~US$54 bn.
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