GIFT IFSC funds see retail rush amid outperforming global markets
Indian retail investors are flocking to international markets through Gujarat International Finance Tec-City (GIFT City) as global markets have significantly outperformed Indian markets. In the April-June quarter, 8,467 investors participated in retail schemes, surpassing the 3,483 investors from the prior quarter. For the first time, retail investors accounted for over 52% of GIFT City's fund management ecosystem.
Meanwhile, alternative investment funds saw a 26% increase in investors, but their share in the ecosystem decreased from nearly 64% to nearly 36%. Vaibhav Shah, head of products and international business at Mirae Asset Mutual Fund, pointed out that global markets' strong performance compared to Indian markets has driven the retail investment surge.
Shweta Rajani, head of mutual funds at Anand Rathi Wealth, attributed this trend to improved access to global investments within India, clearer taxation on retail schemes and ETFs, and an absence of complex regulatory barriers. GIFT City, an IFSC hub in Gujarat, offers tax benefits, reduced compliance, and tax-free foreign investments to global investors, including NRIs and retail investors.
The hub's high-net-worth individuals can invest in foreign markets in foreign currencies through GIFT City IFSC funds. IFSC funds are regulated by IFCA, with a $250,000 limit under the liberalized remittance scheme (LRS), allowing domestic caps to fuel the funds' momentum. The benchmark Nifty 50 and Sensex indices have underperformed by 8-10% this year, while US, South Korean, Taiwanese, and Japanese markets have grown by 10-59%.
Domestic fund houses initially targeted AIFs and wealthy investors but have now shifted focus to retail investors due to increased demand. Funds targeting retail investors, such as PPFAS and Edelweiss, offer lower minimum subscriptions, making international investments more accessible. Despite the attractive returns, investors must balance their exposure due to risks like an AI bubble burst.
Written by urgent.news from The Indian Express's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
