UAE-based investors are the largest non-resident investor group in Indian mutual funds, according to newly released data from the Reserve Bank of India.
According to the data, UAE-based investors pumped $2.1 billion in FY 2019 in equity investments through mutual funds.
Although segregate data is not available, market analysts said that expatriate Indians form the bulk of non-resident investors in the UAE who are investing in Indian mutual funds.
The RBI data shows that UAE-based investors accounted for 16 percent of the total $13.08 billion non-resident investments in Indian mutual funds by the end of March 2019.
Investments from the US – amounting to $1.26 billion – came in second place, accounting for 9.6 percent of the total non-resident Indian investments in Indian mutual funds in FY 2019.
Cumulatively, investors from the UAE, UK and US accounted for one-third of the units held by non-residents in Indian mutual funds.
The total inflow into Indian mutual funds by March this year was up 9 percent year-on-year from $12 million in March 2018.
The period also witnessed bullish sentiments on Indian bourses, with the flagship Bombay Stock Exchange index S&P Sensex rising to about 38,000 points from last year’s level of 33,500.
The UAE’s Indian community has long been a significant source of inward investments into India, with a significant portion of them being investors in the Indian stock market.
A well-diversified investment in mutual funds delivers superior inflation-beating returns when the equity market is in a bullish to normal growth period.
Returns of most of the portfolios by Indian mutual funds, however, have seen significant fall in their NAVs (net asset values of their units) in the recent months, with the Indian market currently going through upheaval due to sluggish economic growth conditions in the country and bleak global factors, partly due to ongoing India-US trade tensions.
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