India-focused offshore funds and ETFs continued to face selling pressure during the quarter ended September 2026, as heightened geopolitical uncertainty, elevated crude oil prices, and tightening global financial conditions weighed on Indian equities. Morningstar's Offshore Fund Spy – September 2026 highlights that the category recorded net outflows of USD 3.9 billion during the quarter, compared with USD 4.6 billion in the preceding quarter.
India-focused offshore funds witnessed net outflows of USD 2.7 billion, marking the fifth consecutive quarter of outflows, while offshore ETFs recorded net outflows of USD 1.2 billion. Continued redemptions, coupled with the correction in Indian equities, led to a 10.2% decline in the category's asset base to USD 72.0 billion.
Despite challenging market conditions, India-focused offshore funds and ETFs delivered an average return of negative 3.58%, outperforming the MSCI India GR USD Index, which declined 5.52%.
Morningstar's latest Offshore Fund Spy report examines these evolving trends. It provides insights into offshore investor positioning toward Indian equities amid continued global uncertainty.
What's Inside
- Quarterly flow and asset trends across India-focused offshore funds and ETFs.
- Key factors shaping foreign investor sentiment and allocations to Indian equities.
- Performance trends across India-focused offshore funds and ETFs.
- Evolving India allocations within global, emerging-market, and Asia/Asia-Pacific funds.
Read the full report here
Please click here for the full disclaimer.