Business Standard

MF overseas assets up 3.7x to $2.8 bn in FY21

- CHIRAG MADIA Mumbai, 15 September

Foreign assets of domestic mutual funds (MFS) surged 3.7 times in a year to $2.85 billion in 2020-21 (FY21), shows the data published by the Reserve Bank of India (RBI). These are largely the overseas equity holdings of domestic MFS.

This comes on the back of a sharp rally in global stocks, coupled with a growing preference among domestic investors to invest in overseas assets, a portfolio diversific­ation strategy.

The assets under management (AUM) of overseas fund of funds had jumped nearly 8 times to ~21,440 crore ($2.9 billion) in August 2021, compared to March 2020 levels, shows the data provided by industry body Associatio­n of Mutual Funds in India (AMFI).

Over the past few months, domestic MFS have launched several new funds offers (NFOS) in the internatio­nal fund category — most of which have been wellreceiv­ed by investors.

Internatio­nal funds on average have given returns of 26 per cent over the past year, with top returns generated by Us-focused internatio­nal funds.

“Overseas equity investment­s of MF companies were largely concentrat­ed in the US and Luxembourg,” the RBI said in its survey of foreign liabilitie­s and assets of mutual fund companies-2020-21.

Meanwhile, MF foreign liabilitie­s rose 50 per cent to $14.45 billion in FY21, from $9.62 billion at the end of FY20. These were mainly MF units issued to non-residents.

The UAE, UK, US, and Singapore together accounted for nearly 45 per cent of total MF units held by non-residents.

The survey covered 44 Indian MF companies and their asset management companies (AMCS) which acquired foreign assets and liabilitie­s during 2020-21.

In terms of foreign direct investment­s, Japan and the UK were the leaders in FY21. Japan invested ~15,606 crore, while FDI from the UK stood at ~14,748 crore during last financial year.

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