Foreign Portfolio Investors (FPIs)

In News 

• Recently, Foreign portfolio investors (FPIs) sold shares worth Rs 5,143 crore.

About 

• It consists of securities and other financial assets held by investors in another country. 
  • FPI holdings can include stocks, ADRs, GDRs, bonds, mutual funds, and exchange-traded funds.
• It does not provide the investor with direct ownership of a company’s assets and is relatively liquid depending on the volatility of the market.
• Along with foreign direct investment (FDI), FPI is one of the common ways to invest in an overseas economy. 
  • FDI and FPI are both important sources of funding for most economies.

Difference between FPIs and  FDI

• A foreign direct investment (FDI) is an investment made by a firm or individual in one country into business interests located in another country.
• Foreign portfolio investment (FPI) instead refers to investments made in securities and other financial assets issued in another country.
• Both methods of foreign investment are crucial to global trade and development, however, FDI is often considered the preferred mode and is less volatile.

Source: IE