India-dedicated funds face persistent outflows despite rebound in Global Emerging Markets

While worldwide flows into US and European markets continue to be robust, funds are shifting to important global emerging economies.

According to a research by Elara Capital, even as international investors raise their allocations to other emerging markets, India-dedicated funds continue to see consistent redemptions. According to the most recent data, India-focused funds saw $270 million in withdrawals this week after $370 million and $425 million were taken out in the two weeks prior, according to Sunil Jain, an analyst at Elara Capital, who made this observation in his March 7 Global Liquidity Tracker. The overall trend is still unfavorable even though the rate of redemptions has decreased.

"If not for the sustained pressure from India-dedicated funds, foreign flows into the country would have turned positive," Jain stated. These funds have seen outflows totaling $4 billion since October 2024, with $3.2 billion taken out in 2025 alone.

Just $15 million left U.S.-domiciled India funds this week, the least amount since January 2025, indicating that the outflows had subsided. Redeemations from European and Japanese funds, however, continued to be high; $86 million was taken out of Luxembourg-based funds, followed by Ireland ($59 million), the UK ($49 million), and Japan ($32 million).

While outflows from India are still occurring, foreign investors have increased their allocations elsewhere by taking advantage of the recent drop in US markets. Inflows into US funds increased from $5.1 billion the week before to a five-week high of $7.9 billion. For the third straight month, European funds also experienced robust inflows, with $12 billion over the last four weeks and $4 billion this week. "This marks the strongest streak of inflows into Europe since June 2021, as investors position for a breakout in the Euro Stoxx 50 index, which is trading near its highs from 2000," Jain stated.