How different GIFT City outbound funds Compare India’s GIFT City has emerged as a hub for outbound investment funds, offering both alternative investment funds (AIFs) and portfolio management services (PMS) that allow investors to diversify globally. With several fund houses launching strategies ranging from equity to thematic plays and even commodity-focused bets, the choices are expanding, but they come with caveats. Each fund shares a different strategy, Fynprint spoke to experts to break down how each approach differs, what risks and benefits it carries, and how investors can align these options with their risk appetite, investment horizon, and liquidity needs.
Retail Fund The DSP Global Equity Fund is the first retail fund launched out of GIFT City. With a minimum ticket size of USD 5,000 and going up to USD 100,000, it allows investors to diversify globally with a much lower entry barrier compared to AIFs or PMS structures. The fund focuses on value investing across 30–50 stocks with exposure to the US, Europe, Japan, and China. Dhawan noted that it’s suited for investors seeking lower ticket entry but warned about higher management fees.
Alternative Investment Funds (AIFs) Among the AIFs, Ionic Global Innovation Fund targets mid-tier IT companies across global markets. Its key advantage is avoiding churn tax through a Cayman Islands route, but liquidity is limited to fortnightly redemptions. Investors should note that the fund is thematic and tech-focused, carrying higher risk and concentration compared to broader global equity funds. ABSL Global Bluechip Feeder Fund invests through a feeder structure into Lyptus Capital’s 25–30 bluechip stocks, primarily in the US. Dhawan highlighted the experience of its fund manager, but pointed out the downside: a 4-year lock-in and limited flexibility. For thematic commodity exposure, Rational Fund invests predominantly in gold and silver mining stocks. While stocks are reasonably valued, the fund carries concentration risk in a single asset class. PMS Strategies On the PMS side, PhillipCapital Global PMS invests in global ETFs, offering wide diversification with sector-agnostic exposure. However, investors must consider taxation on portfolio churn.
Marcellus Global Compounders PMS follows a bottom-up, 25–30 stock strategy focused on long-term compounding. While it provides flexibility in fee structures, it is heavily concentrated in the US market and is subject to tax on churn. “These five funds differ significantly in their investment approaches, fee structures, and target markets,” said Abhishek Kumar, SEBI RIA and founder of SahajMoney. He emphasized that liquidity, ticket size, and geographic preferences are key considerations. For example, DSP suits investors seeking daily liquidity with a smaller ticket, whereas ABSL and PMS options require higher commitments but offer stability and diversification. PPFAS Global Investment Strategy PMS follows a value investing philosophy with a disciplined approach to allocation. Sector exposure is capped at 25% while single company exposure is capped at 10%, ensuring diversification and risk control. The fund invests in global companies with diversified revenue streams, giving investors access to both domestic and international opportunities. It also offers lower fees for direct, which is 1% and carries zero exit load, though capital gains tax applies on redemption or churn. Looking ahead, retail investors can also expect new offerings, including the Parag Parikh IFSC S&P 500 Fund of Fund and the Parag Parikh IFSC Nasdaq 100 Fund of Fund in GIFT. What experts say? “The options available through the GIFT City route have very limited track records at this point, and where they do have at least one year of track record, the results are mixed in terms of beating their benchmarks over different time frames,” said Vishal Dhawan, SEBI RIA and founder of Plan Ahead Wealth Advisors. He added that high expense ratios could pose challenges if global market returns normalize, and thematic funds should only be considered by investors who already have a core international portfolio. “When investors want to add a global footprint to their portfolio, the AIF and PMS outbound options coming from GIFT City are worth considering,” said Nishant Kohli, founder of NRI Nivesh. He highlighted four key parameters to evaluate: risk appetite, investment horizon, liquidity, and taxation. Kohli suggested that DSP is suitable for moderate-risk investors with a smaller corpus, while ABSL and PhillipCapital appeal to those seeking relative stability. High-risk thematic plays like Ionic and Rational are better suited for seasoned investors comfortable with volatility. Marcellus, he noted, offers a focused long-term compounding strategy for those willing to commit larger sums patiently.
He also reminded investors that both AIFs and PMS are long-term vehicles, typically suited for investment horizons of five years or more. While PMS and retail funds offer more liquidity, AIFs can come with lock-ins and exit loads depending on the structure. Amit Sahita, Director of Fincode Advisory Services Pvt. Ltd., added, “This space is very much in demand, especially with NRIs who want to avoid rupee depreciation. We, at present, are more inclined towards Marcellus Global Compounders because it is overweight US stocks. Long term investors should go with Marcellus since it's diversified, hasn't taken a specific sectoral overweight, nor does it have a lock-in.” Final thoughts Outbound funds through GIFT City offer a new route for global diversification, but higher costs, shorter track records, and varying liquidity mean they are best suited for seasoned investors. “We believe it may be too early to allocate monies to these specific GIFT City strategies,” said Dhawan. He recommends waiting for at least a five-year track record, including performance through a bearish market cycle, before committing significant sums. In the interim, Dhawan suggests that investors may be better off using global ETFs to gain international exposure. While this approach is less tax-efficient and operationally more intensive, it provides a more established and transparent way to diversify globally until the GIFT City funds mature.
Source:https://thefynprint.com/global-investing/different-gift-city-outbound-funds-compare?id=6 8d5ebabb46f25bbba085f23
