The third way to access global markets through GIFT City is through GIFT City Funds.

Among the three routes we discussed, this one is structurally the most different from what most Indian investors are familiar with.

To understand why, it helps to look at how international mutual funds in India are normally structured.

When you invest in a typical Indian feeder fund that tracks an index like the S&P 500, your money first goes into an Indian mutual fund. That fund then invests in an overseas master fund, which actually holds the underlying stocks.

So the structure usually looks like this:

Investor → Indian feeder fund → Overseas master fund → Stocks

This creates two layers in the structure, and each layer comes with its own set of operating costs. These funds also fall under SEBI regulation and therefore remain subject to the industry-wide overseas investment limits we discussed earlier.

GIFT City funds are structured differently.

These funds are domiciled directly in GIFT City and regulated by IFSCA, the regulator governing the international financial zone. Instead of operating as feeder funds, they invest directly in global equities.

So the structure becomes much simpler:

Investor → GIFT City Fund → Global stocks

There is no intermediary master fund layer between the investor and the underlying companies.

For example, if you invest in a fund such as the DSP Global Equity Fund operating from GIFT City, the fund manager directly purchases shares of global companies like Apple, Meta, Lululemon, Nintendo, Brookfield, or Puma.

The investment is managed by the fund house through its GIFT City entity registered with IFSCA, which allows it to operate under the international financial framework of the zone.

Another difference is the currency denomination.

Investments in these funds are typically denominated in US dollars. When you invest, your rupees are converted into dollars at the prevailing exchange rate.

For example, an investment of around ₹4.5 lakh might convert to roughly $5,000, depending on the exchange rate on that day. The fund’s NAV is quoted in dollars, and the value of your investment is tracked in dollar terms.

This creates a natural currency dimension to the investment.

If the rupee weakens against the dollar, the value of the investment increases when viewed in rupee terms, even if the dollar NAV remains unchanged. If the rupee strengthens, the opposite happens.

For investors saving towards goals that may eventually require spending in dollars, such as education abroad or living overseas, this dollar denomination can align the investment with the future expense.

The minimum investment for most GIFT City funds is typically around $5,000, which translates to roughly ₹4 to ₹4.5 lakh, depending on the exchange rate.

This is very different from global funds, where investors can often begin with a just $10 (discussed global funds or UCITS in detail in the previous chapter)

Because of this higher entry threshold, GIFT City funds are generally designed for investors who have already accumulated capital and want to allocate a meaningful portion of their portfolio to international markets.

Another difference is that systematic investment plans (SIPs) are currently not widely available in GIFT City Funds.

As a result, these funds tend to suit investors making lump-sum allocations rather than small, recurring monthly investments.