Mutual Fund Distributors (MFDs) have a golden opportunity to expand their offerings with mutual fund schemes from Asset Management Companies (AMCs) based in the International Financial Services Centre (IFSC) in Gujarat International Finance Tec (GIFT) City, Gandhinagar.
Tax-Free Investments and Global Practices
GIFT City operates under international norms, exempting products and services from Indian domestic laws. This means investors aren’t liable for Indian taxes, though they must comply with tax laws in their own countries. For instance, clients from Dubai and Singapore can invest without worrying about Indian taxes.
Unified Regulation and Simplified Onboarding
A major advantage is dealing with a single regulator, the International Financial Services Centres Authority (IFSCA), for all financial products including mutual funds, stocks, Portfolio Management Services (PMS), Alternative Investment Funds (AIFs), insurance, and pensions.
Onboarding clients is straightforward, requiring only basic identification documents like passports and utility bills. Transactions can be executed through any foreign bank account in dollars, bypassing the need for NRI or NRO accounts. While some fund houses offer digital onboarding, physical copies of documents are still required within 15-20 days.
Who Can Invest?
NRIs and foreign nationals can invest in funds targeting Indian markets. Resident Indians can invest in outbound funds that allocate to international markets.
Investment Minimums and Commission Structures
Investors must commit a minimum of USD 150,000 or INR 1.25 crore, with options to invest in tranches over six months or a year. Fund houses in IFSC offer lucrative commissions, with upfront commissions up to 2.70% for two years and trail commission models around 1.35%.
Leading Fund Houses and Empanelment
Prominent fund houses like Aditya Birla Sun Life, DSP, HDFC, IIFL, ITI, Kotak, Mirae Asset, Motilal Oswal, and Nippon India are active in GIFT City, offering AIFs. MFDs can distribute these AIFs by completing a separate empanelment process for GIFT City.
Transparent Fee Structure
Management fees can go up to 1.50%, with total expense ratios reaching up to 2% when including other expenses.
GIFT City presents a significant growth avenue for MFDs, enabling them to offer global-standard financial products with attractive benefits and streamlined regulatory processes.