What are Gift City Funds?

GIFT City Funds are a new class of mutual funds launched by Asset Management Companies (AMCs) operating within the Gujarat International Finance Tec-City (GIFT City) ecosystem. These funds can offer you with compelling opportunities to diversify your investment portfolio. Let’s understand what GIFT City Funds are all about.  

What is GIFT City?

GIFT City, short for Gujarat International Finance Tec-City, is India’s first International Financial Services Centre (IFSC). Found in Gandhinagar, Gujarat and conceived in 2008 under the leadership of Prime Minister Narendra Modi, it is a world-class smart city with cutting-edge infrastructure.

The GIFT City is an attractive destination for global financial players. Positioned on the banks of the Sabarmati River, it serves as a high-tech hub for the Information Technology/ Information Technology Enabled Services (IT/ITeS), Banking, Financial Services, Insurance (BFSI), and other service sectors.  

What are GIFT City Funds?

GIFT City Funds are mutual funds launched by AMCs through banking units based in GIFT City’s IFSCs. These funds are regulated by the International Financial Services Centre Authority (IFSCA) and are typically structured as offshore mutual funds. They allow both Indian and international investors to gain exposure to global markets.

GIFT City Mutual Funds invest in a wide range of international securities, including equity and debt. They invest and transact in multiple currencies, all from a single platform. This makes it easier for you to diversify your portfolios internationally.

Types of GIFT City Funds

GIFT City Funds fall under a few broad categories. The two primary categories are:

1. Alternative Investment Funds (AIFs): Types of AIFs available in GIFT City include:
   • Real Estate Funds
   • Private Equity Funds
   • Hedge Funds
   • Infrastructure Funds
     
     
2. Portfolio Management Services (PMS): They come in different forms:
   • Discretionary PMS
   • Non-Discretionary PMS
   • Advisory PMS
   • Focused PMS  

Key benefits of investing in GIFT City Funds

Here are some advantages of investing in GIFT City Mutual Funds:

• Access to global opportunities: GIFT City Funds allow you to invest in international markets and securities. They offer exposure to a diverse range of opportunities.
• Multi-currency flexibility: You can invest and redeem your money in major foreign currencies such as USD, EUR, and others. This makes investing less complicated and removes the hassles of converting currencies.
• Ease of investing and repatriation: The investment and repatriation process is streamlined and investor-friendly, making it simple for both domestic and overseas investors to move funds in and out without unnecessary delays.
• Tax benefits: These funds are exempt from Tax Deducted at Source (TDS) under current GIFT City regulations. Additionally, depending on the country of residence, Non-Resident Indians (NRIs) may benefit from favorable tax treaties between India and their home country.
• Professional fund management: GIFT City Funds are managed by seasoned fund managers who bring global expertise and knowledge to the table. This enhances the potential for better returns.

Who should consider GIFT City Funds?

GIFT City Mutual Funds can be suitable for the following:

• Indian residents looking to diversify their portfolio with international assets can consider GIFT City Funds
• Non-Resident Indians (NRIs) and Overseas Citizens of India (OCIs) can benefit from these funds and invest in these funds in the currency of their home country
• These funds are more suitable for investors comfortable with a higher level of risk. If you are open to risk, you can consider them
• If you want to spread your investments across geographies, GIFT City Funds can be suitable

How to invest in GIFT City Funds?

You can invest in GIFT City Funds in the following ways:

• You can visit the official website of an AMC operating in GIFT City and invest through it
• You can approach your bank to find out if they provide access to GIFT City Funds
• You can consult with a licensed financial advisor or wealth manager

Conclusion

GIFT City Funds, though relatively new, can open up exciting opportunities for you, including global exposure, diversification, and seamless investment in international markets. They also offer tax benefits. However, like all market-linked instruments, they carry risk. So, it is important to do your due diligence to ensure these funds align with your risk appetite and financial goals. 

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