PPFAS To Enable Easy Access To US Stocks Via Two New GIFT City Funds — Check Key Details

Financial services provider Parag Parikh Financial Advisory Services (PPFAS) has received regulatory approval to launch two new passive outbound funds from GIFT City. These are the S&P 500 Fund of Fund (FoF) and the Nasdaq 100 Fund of Fund. These new funds will give Indian investors easy access to shares of top US companies like Meta and Netflix.

Both funds follow a fully passive strategy. They invest in UCITS-compliant index funds tracking the S&P 500 and Nasdaq 100. The S&P 500 Fund is benchmarked to the S&P 500 Net TRI. The Nasdaq 100 Fund follows the Nasdaq 100 Notional Net TRI, according to the fund house.

Each unit has been priced at $100. Investors are likely to be attracted to the no-lock-in or exit load feature of these funds. Investment in these funds can be made in two classes: Class A and Class B. 

Class A (Direct) requires a minimum investment of $5,000 and a 0.3% total expense ratio (TER). Class B (Regular) has the same minimum investment cap but a 0.6% TER. Overall, investors are expected to face costs well below 1%, which is generally considered low and cost-efficient.

PPFAS has promised several advantages of its new GIFT City funds. There is no US inheritance tax. Additionally, tax compliance for Indian investors is easier because taxes are paid at the fund level. Short-term gains, if redeemed within two years, are taxed at 42%. Long-term gains, held over two years, are taxed at 12.5% on returns exceeding Rs 1.25 lakh in a financial year.

Forex and transaction costs are also lower. The funds are designed to be simpler, cost-efficient and tax-friendly. 

Parag Parikh IFSC S&P 500 FoF

The fund is designed for Indian resident individuals, corporates, trusts, partnership firms, and other eligible investors. The base currency is USD. The minimum investment is $5,000, with a top-up of $500 per instance. The fund is benchmarked to the S&P 500 Net TRI. 

Purchase NAV is calculated on a long-term post-tax basis, while redemption NAV depends on the investor’s holding period.   

There is no lock-in period, which means that the investors can redeem anytime. The fund also does not charge any exit load. Due to the lower expected TER, the fund will be one of the most competitively priced international options for Indian investors.

The S&P 500 Index represents 500 of the largest US publicly traded companies, such as Nvidia, Apple, Microsoft, Amazon, Meta, Netflix and Tesla, among others.

PPFAS Nasdaq 100 Fund of Fund invests in Nasdaq 100 accumulating ETFs and UCITS. Following a passive strategy, the fund gives investors direct exposure to the Nasdaq 100 index without needing a foreign brokerage account, according to PPFAS.

The fund is open to Indian resident individuals, corporates, trusts, partnership firms and other eligible investors. The fund is benchmarked to the Nasdaq 100 Notional Net TRI. The minimum investment is $5,000, with top-ups of $500 per instance. 

Purchase NAV is calculated on a long-term post-tax basis and redemption NAV depends on the holding period. There is no lock-in period, allowing investors flexibility to redeem anytime. No exit load is charged in this fund, PPFAS stated on its website.