Resident Indians have a growing choice of dollar-denominated retail funds in GIFT City, a market that began with DSP’s launch in 2025. These funds offer an alternative to buying foreign stocks through overseas brokers or investing through domestic international funds, many of which have stopped accepting fresh investments. Business Standard’s step-by-step guide explains how to invest.
Seven funds have performance data available for comparison. The five that disclose their size together manage about $157 million, according to their latest factsheets. They differ substantially in investment strategy, costs and returns. An eighth fund, from Aditya Birla Sun Life, reopened for investment on November 13.
The seven funds fall into three categories. PPFAS and HDFC offer passive funds that track indices through overseas exchange-traded funds (ETFs). Edelweiss operates a feeder fund that invests in a JPMorgan fund. DSP and Marcellus manage active portfolios of global stocks.
Deepesh Raghaw, a Securities and Exchange Board of India (Sebi)-registered investment advisor and founder of PersonalFinancePlan.in, expects passive funds to gain ground. “In retail GIFT City funds, I think you will see passive products garnering a bigger share of retail money,” he says. HDFC chose passive funds deliberately. “Our preference for passive strategies is also supported by industry data which suggests that majority of actively managed global equity funds as well as emerging market funds have underperformed their respective benchmarks,” says Navneet Munot, managing director and chief executive of HDFC Asset Management Company (AMC). HDFC is evaluating actively managed outbound funds for more sophisticated investors, he adds.
Table 1: Launch dates, assets and returns since launch of GIFT City retail funds (direct plans)
| Fund | Launch date | Assets ($ million) | Return since launch |
|---|---|---|---|
| DSP Global Equity | September 18, 2025 | 64.4 | -5.9 per cent |
| PPFAS Nasdaq 100 | March 20, 2026 | 43.3 | +13.3 per cent |
| PPFAS S&P 500 | March 20, 2026 | 32.4 | +13.6 per cent |
| Edelweiss Greater China Equity | March 10, 2026 | 10.2 | -4.6 per cent |
| Marcellus Global Equities | June 25, 2026 | 6.9 | -1.9 per cent |
| HDFC Developed Markets Equity | August 27, 2026 | Not disclosed* | -2.9 per cent |
| HDFC Emerging Markets Equity | August 27, 2026 | Not disclosed | -9.6 per cent |
Source: Fund-house factsheets and net asset value (NAV) data. Assets are as on September 30 for Edelweiss and the end of October for DSP, PPFAS and Marcellus. Returns are in dollars, calculated up to November 9, and reflect fund-level taxation. *Note: HDFC has received inflows of about $20 million combined across its two funds since late August.
How the funds have performed
Only the two PPFAS funds are trading above their launch values. The Nasdaq 100 fund has gained 13.3 per cent and the S&P 500 fund 13.6 per cent since their March launches. Both trail their underlying indices by 2.5-3 percentage points, largely because of tax paid at the fund level. Before tax, PPFAS’s factsheets show that both funds tracked their indices closely.
The other five funds are below their launch values. DSP Global Equity, the oldest, has declined 5.9 per cent since September 2025. Its benchmark, the MSCI All Country World Index (ACWI), gained 15.6 per cent between the fund’s launch and the end of October.
HDFC’s Developed Markets fund is down 2.9 per cent and its Emerging Markets fund 9.6 per cent since their August launches. Marcellus, launched in June, has declined 1.9 per cent.
Edelweiss Greater China Equity has seen a particularly sharp reversal. It was up 7.9 per cent since launch at the end of September but has since fallen about 12 per cent, leaving it 4.6 per cent below its launch value. The fund invests in a JPMorgan fund focused mainly on Taiwanese and Chinese equities.
Most of these funds are less than a year old, making it too early to draw meaningful conclusions about their long-term performance. “We would advise investors not to give too much weight to a fund manager’s performance over such a short period,” says Abhishek Kumar, a Sebi-registered investment advisor and founder of SahajMoney. “Instead, they should look at how each fund is built and how closely it tracks its benchmark index.”
All these returns are in dollars. “Returns are influenced not only by the performance of the underlying international markets but also by movements in exchange rates when measured in rupee terms,” Munot says.
How tax affects returns
Under the tax structure described by the fund houses, GIFT City funds pay tax at the fund level. Their NAV — the price of a unit — reflects this tax.
“In our world in GIFT City, the taxation is not at the investor level. Taxation is at the fund level,” says Hema Thakkar, head of business development (alternatives) at PPFAS. “Whatever NAVs you are seeing, they are post-tax NAVs.”
The applicable rates cited in the fund documents are 14.95 per cent on gains from holdings exceeding 24 months and 42.74 per cent on shorter holdings.
Selling early can therefore reduce returns. “We are not expecting people to redeem so fast. Because it gets into the short-term tax,” Thakkar says.
PPFAS publishes a lower short-term NAV for investors redeeming within two years. For its S&P 500 fund, the short-term NAV was $113.72 on November 11, against $114.75 for longer-term holdings. Most funds also impose exit loads on early withdrawals.
How the two-year rule applies varies by fund, Kumar says. In actively managed funds like DSP, it depends on how long the fund holds each stock, so frequent trading pushes more gains into the roughly 43 per cent short-term rate. In PPFAS’s index funds, it depends on how long the investor holds their units. In both cases, he adds, the tax is already reflected in the NAV and is generally not charged again on redemption, but investors should check each scheme’s tax note.
What the funds cost
Fund houses report expenses differently. PPFAS includes the cost of underlying funds in its total expense ratio. HDFC and Edelweiss exclude these charges from their reported expense ratios, although investors bear them indirectly.
Table 2 makes the costs more comparable by including the underlying fund’s charge where applicable. DSP and Marcellus invest directly in stocks, so there is no additional underlying fund expense.
Table 2: Total expense ratios, including underlying fund charges (direct plans)
| Fund | Total expense ratio |
|---|---|
| PPFAS S&P 500 | 0.35 per cent |
| PPFAS Nasdaq 100 | 0.50 per cent |
| HDFC Developed Markets | 0.56 per cent |
| HDFC Emerging Markets | 0.65 per cent |
| Edelweiss Greater China | 1.42 per cent |
| DSP Global Equity | Up to 1.00 per cent |
| Marcellus Global Equities | 1.25 per cent |
Source: Fund factsheets and offer documents. PPFAS reports an all-inclusive expense ratio. For HDFC and Edelweiss, the figures include both the fund’s reported expense ratio and the underlying fund’s charge.
Regular plans, sold through distributors, are more expensive than the direct plans shown in Table 2. Their charges are higher by 30 basis points at PPFAS, 50 basis points at HDFC, 1 percentage point at Edelweiss and 75 basis points at DSP and Marcellus.
PPFAS does not levy an exit load. The other funds charge 1-2 per cent for redemptions within the first two years. PPFAS requires a minimum investment of $500, while the other five funds in the comparison require $5,000. HDFC’s $5,000 minimum reflects the fixed transaction costs of processing investments, Munot says. “Reducing the minimum investment is certainly a priority for us and we hope to offer a lower entry threshold in the foreseeable future,” he says.
More funds enter the market
Aditya Birla Sun Life’s Emerging Market Equity Fund, which feeds into the ARGA Emerging Market Equity Fund, launched on October 23 and reopened for investment on November 13. It has a $500 minimum investment and charges 1.25 per cent under its direct plan, excluding underlying fund expenses. Investors redeeming within a year face a 2 per cent exit load.
Three other products are in the pipeline.
Edelweiss’s US Technology Equity Fund will invest in JPMorgan Funds – US Technology Fund. It has a minimum investment of $5,000, with operating costs capped at 0.30 per cent.
JioBlackRock’s Advantage World Equity Fund will invest 90-100 per cent of its assets in BlackRock’s Advantage World Equity Fund, which focuses on developed markets. The minimum investment is $5,000. It has no exit load, while its total expense ratio, including underlying fund charges, is 0.90 per cent for the direct plan and 1.40 per cent for the regular plan.
Franklin Templeton’s Franklin US Equity IFSC Fund will be a feeder into the FTGF Putnam US Research Fund.
“For first-time investors, given the lack of long-term data on active funds in this space, we would advise starting with index funds: they have lower expense ratios, are more tax-efficient, and don’t require betting on a fund manager,” Kumar says.
