Comparing GIFT City and International Mutual Funds: Returns, Investment, and Taxation

GIFT City funds have emerged as an alternative means for Indian investors to access global equities, especially as many international mutual funds are constrained by the Reserve Bank of India’s $7 billion investment cap.  

This blog outlines the returns, minimum investment requirements, and taxation implications associated with GIFT City funds and international mutual funds. 

Differences in Minimum Investment Between GIFT City and International Mutual Funds 

Investors looking at GIFT City funds must remit funds in foreign currency under the Liberalised Remittance Scheme, where amounts up to $2,50,000 per financial year are permissible.  

The minimum subscription for GIFT City schemes generally ranges from $500 to $10,000. On the other hand, international mutual funds accept investments from as low as ₹100, allowing for smaller investment commitments. 

Taxation Structures in Focus 

Taxation significantly differs between the two fund options. International mutual funds are subject to the investor's applicable income tax slab rate for gains acquired post-April 1, 2023.  

Conversely, GIFT City funds incur taxes at the fund level: long-term gains taxed at 14.95%, short-term gains at 42.74%, and dividends at 35.88%, with no additional tax on redemption in India. 

Performance of GIFT City Funds in 2026 

GIFT City funds exhibit varied return performance as of 2026. The Parag Parikh S&P 500 Fund shows an 18.89% return, and the Nasdaq 100 Fund records a 27.95% return.  

Conversely, the Marcellus Global Equities Fund noted a -1.27% return. Returns vary widely across other offerings, such as the Edelweiss Greater China Equity Fund at 6.47% and the HDFC International Developed Markets Equity Fund at -1.01% 

(Note: In the above data the Funds' latest factsheets, Direct plans, Returns as on September 30, 2026) 

International Mutual Funds Returns 

Some international mutual funds have yielded higher returns, like the Nippon India Taiwan Equity Fund with a 97.94% one-year return, although closed to new investments.  

The Baroda BNP Paribas Aqua FoF, open for new investments, delivered a 9.36% one-year return. 

Conclusion 

GIFT City funds provide higher minimum investment thresholds and differing tax structures, while international mutual funds offer easier access with lower entry points. Performance varies distinctly, evident from funds like Parag Parikh's with 27.95% return and Nippon India's 97.94% one-year result. Identifying suitable options depends on individual financial strategy and adherence to regulatory frameworks. 

Disclaimer: This blog has been written exclusively for educational purposes. The securities or companies mentioned are only examples and not recommendations. This does not constitute a personal recommendation or investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions. 

Mutual Fund investments are subject to market risks, read all scheme-related documents carefully.