India-Focused Offshore Funds: Volatility, Outflows, and Tactical Repositioning

India-focused offshore funds and ETFs remained under pressure in the quarter ended December 2025. Morningstar’s Offshore Fund Spy – December 2025 highlights that the category recorded net outflows of USD 1.8 billion during the quarter and USD 5.8 billion over the one-year period.

The weakness was led by actively managed India-focused offshore funds, which saw USD 2.4 billion in quarterly outflows—an acceleration from the previous quarter—taking one-year outflows to USD 6.1 billion. In contrast, offshore ETFs witnessed a net inflow of USD 552 million during the quarter and USD 280 million over the year, suggesting selective and tactical allocations amid volatile global conditions.

As key conduits for foreign participation in Indian equities, India-focused offshore funds and ETFs remain highly sensitive to shifts in global liquidity, risk appetite, and macro signals.

Morningstar’s latest report unpacks these evolving trends and examines the key drivers shaping foreign flows into Indian equity markets.

Download the report to know more