ETFs accounted for a third of record FPI outflows in June, shows data

India-dedicated funds saw outflows to the tune of $906 million in June. Meanwhile, funds investing in global emerging markets (GEM) and other funds (such as those investing in Asia ex-Japan, BRIC and global markets) yanked out $997 million and $354 million, respectively. Total outflows from funds tracked by EPFR Global, a data provider, stood at $2.6 billion, accounting for a third of capital outflows from the domestic market in June. 

This indicates flows emanating from passive funds or exchange traded funds (ETFs) are having a considerable sway on the domestic markets. According to depository firm NSDL, total foreign portfolio investor (FPI) outflows from the domestic market stood at a record $6.4 billion in June. 

The EPFR fund-flow data primarily tracks mutual funds, ETFs, closed-end funds, variable annuity funds, and insurance-linked funds. 

It does not include investments from hedge funds, proprietary desks, and sovereign wealth funds, which are tracked by NSDL. Assets under management (AUM) of India-dedicated funds has declined 14 per cent in the past one year to $36 billion. AUM of GEMs have declined 15 per cent to $117 billion during the same period.