The traditional Indian investment portfolio is undergoing a transformation. A new generation of investors is looking beyond domestic assets and want to expand their ambit to global options, driven by a desire for diversification, a hedge against a depreciating rupee and easier access to the world’s leading companies. This strategic shift formed the focus of ‘Mint Horizons’, a premier masterclass series led by Neil Borate, Editor of Mint Money, in its fifth session that was recently held in Ahmedabad.
The event was attended by a hybrid mix of seasoned investors and new ones and offered insights into the world of global markets. The latest edition of ‘Mint Horizons’ comes after successful editions in Bengaluru, Delhi, Mumbai and Pune, and had a special focus on India’s International Financial Services Centre (IFSC) in GIFT City. The discussions at the event explored how IFSC is serving as a new gateway for outbound capital and how FinTech platforms are empowering investors with the right tools for building a global portfolio.
GIFT City: Acting as a gateway to the world
The event began with Borate offering insights into the global investment landscape and why Indians should diversify their portfolios to look beyond India.
Since this edition was held in Ahmedabad, the unique status of GIFT City was brought to focus. Mihir Upadhyay, General Manager, Department of Capital Markets, International Financial Services Centres Authority (IFSCA), spoke about GIFT City Funds in a fireside chat. “To keep it simple, GIFT City is an enclosure within India, but it can be treated as offshore of India. So, everything in GIFT City is related to financial services,” Upadhyay said.
This strategic positioning allows the IFSCA to benchmark its regulations against global financial centres such as Singapore, Mauritius, Hong Kong and Dubai, with the aim of attracting business that was previously conducted from overseas locations. “Our competition is really not India, it’s abroad,” he further said, highlighting the vision to “onshore the offshore” and bring back India-related business that had gravitated to other financial centres.
GIFT City was reportedly conceived after PM Narendra Modi saw many Indians working in the financial services sector and catering to Indian investors on a visit to Singapore.
The new regulatory framework, established by the IFSCA in 2019, is designed to be principle-based and provides fund managers with a clear set of rules. This has fostered a conducive environment for both inbound funds (foreign money invested in India) and outbound funds (Indian residents investing globally).
Strategies and opportunities in outbound investing
The discussion progressed to how the emergence of retail outbound funds has helped democratise global investing for Indian investors. A panel discussion titled “Outbound & Global Strategies” saw experts exploring practical approaches to building a global portfolio. Jay Kothari, Senior Vice President, Lead Investment Strategist – Equity Investments and Global Head – International Business at DSP Investment Managers, spoke about the strategy deployed by fund that has a minimum investment of $5,000. “If you look at the Indian market cap, which is close to $5 trillion..you are just 4% of the global market cap. So, you have another 95% to invest into. And the correlation of India versus globe is extremely low at maybe 30-50%,” he said.
He also shared insights into the fund’s universe of investment, which includes a diverse range of companies and sectors. “Whether it’s a consumer internet play, like the likes of Amazons or PDD, or athleisure brands like Puma, Nike, or Lululemon,” he said. The portfolio also includes pure-play Electric Vehicle (EV) companies like BYD and key players in the global payment system like Mastercard and Visa. Kothari added that the fund is underweight on the US market and overweight on Europe and Asia, which he believes drives greater value.
Ankita Pathak, Macro Strategist and Global Equities Fund Advisor at Ionic Asset, a firm with a non-retail AIF license, offered a complementary perspective. Her firm’s strategy focuses on “innovation enablers”, such as companies working in domains of cyber security and cloud computing, which underpin the growth of Artificial Intelligence (AI). She said that her fund seeks companies with solid financials, not just hype: “We have never touched a Tesla in our life, and we hold four and a half percent in BYD.”
Defining returns, asset allocation and exits
The masterclass also attempted to answer questions from the audience, offering further insights into the global investing landscape. An investor from the audience asked: “I don’t care where you invest. What I care about is the return. Is 33% of my portfolio in mutual funds and 66% in real estate a good strategy? And when do I exit?”
Kothari and Pathak offered a well-rounded response. “There is no right answer because based on your kind of temperament and your life goals, this answer will change,” said Kothari. The real power of investing, he added, lies in time. “What makes you the maximum money is not just the returns… the more you spend time, it will compound.”
Ankita expanded on this, highlighting the strategic value of building a dollar corpus through India’s Liberalised Remittance Scheme (LRS). She cited a scenario of an Indian client who had the wealth but whose son was settled abroad and didn’t want to come back to India. The client set up a company abroad and having a ready pool of dollars built over the years allowed them to fund the venture without being restricted by the annual $2,50,000 LRS cap. This demonstrated the value of global investing beyond just returns, serving as a hedge against future needs like overseas education or relocation. “Exiting an outbound fund before two years makes no sense,” she said, pointing to the need for a long-term mindset.
The rise of DIY investing
The final leg of the masterclass put the spotlight on the role of technology in empowering individual investors. Shubh Moulik, Founder and CEO at FinTech platform Appreciate spoke the Do-It-Yourself (DIY) approach to investing abroad. He felt that the traditional barriers such as lack of awareness, lack of access, high costs and tedious paperwork are no longer relevant in today’s landscape.
“If you were to download the Appreciate app, you can onboard in roughly three minutes, and you can complete a transaction in roughly 15 seconds, fully digital, end-to-end. Thanks to our regulators and IFSCA, who have enabled some of this,” he said.
He added that the platform has also made it extremely cost-effective, with Forex fees at or below 1% and transaction charges in single-digit rupees.
He also spoke about a common concern that investors have on their minds – the chance of a US market downturn. Moulik felt that a bear market in the US would likely affect the rest of the world, and that the US market’s depth provides ample opportunities even in a downturn. He cited historical data showing that the US has led innovation since the 1950s, not just in AI and technology, but also in BioTech, robotics and genetics.
He offered advice for investors looking for easy exposure and said: “You have significant US listed stocks and ETFs that cover emerging markets. So, if you really want to get exposure to emerging markets, you can actually do that through a bunch of ETFs that already have selected leading index leaders or thematic portfolios that you want to build.”
Taxation, fees and future outlook
The session also addressed concerns and practical questions about taxation and bank charges. Kothari clarified that the US estate duty is more applicable to stocks and not on the funds. Talking about bank charges, he said that the issue of unfavourable exchange rates but mentioned that the digital platforms being developed would reduce this cost significantly. For individual investors, Moulik noted that long-term capital gains on international investments are taxed at a manageable 12.5% after a two-year holding period.
The event concluded on an optimistic note. Upadhyay encouraged investors to learn more about GIFT City’s offerings and reiterated its commitment to becoming a top global financial centre. “I would say it’s a long journey we have just begun. The growth has been good to begin with in the last four years, with the number of entities that are registered, but we are just not even touched,” he said.
All in all, with the right tools and knowledge, Indian investors are now well-equipped to build globally diversified portfolios.
Note To Readers: Mint Horizons Ahmedabad edition is presented in partnership with Appreciate.
