GIFT City funds compared: What they cost and how they have performed

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Seven retail funds with available performance data differ widely in size, charges and returns, while more products enter the market

Seven funds have performance data available for comparison. The five that disclose their size together manage about $157 million, according to their latest factsheets. They differ substantially in investment strategy, costs and returns. An eighth fund, from Aditya Birla Sun Life, reopened for investment on November 13.

The seven funds fall into three categories. PPFAS and HDFC offer passive funds that track indices through overseas exchange-traded funds (ETFs). Edelweiss operates a feeder fund that invests in a JPMorgan fund. DSP and Marcellus manage active portfolios of global stocks.

Deepesh Raghaw, a Securities and Exchange Board of India (Sebi)-registered investment advisor and founder of PersonalFinancePlan.in, expects passive funds to gain ground. “In retail GIFT City funds, I think you will see passive products garnering a bigger share of retail money,” he says.

HDFC chose passive funds deliberately. “Our preference for passive strategies is also supported by industry data which suggests that majority of actively managed global equity funds as well as emerging market funds have underperformed their respective benchmarks,” says Navneet Munot, managing director and chief executive of HDFC Asset Management Company (AMC). HDFC is evaluating actively managed outbound funds for more sophisticated investors, he adds.

Table 1: Launch dates, assets and returns since launch of GIFT City retail funds (direct plans)

Source: Fund-house factsheets and net asset value (NAV) data. Assets are as on September 30 for Edelweiss and the end of October for DSP, PPFAS and Marcellus. Returns are in dollars, calculated up to November 9, and reflect fund-level taxation. *Note: HDFC has received inflows of about $20 million combined across its two funds since late August.

Only the two PPFAS funds are trading above their launch values. The Nasdaq 100 fund has gained 13.3 per cent and the S&P 500 fund 13.6 per cent since their March launches.

The other five funds are below their launch values.

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