HDFC AMC International (IFSC) Limited has launched the HDFC International – Developed Markets Equity Fund, an open-ended fund of funds domiciled at GIFT City, Gandhinagar. Exact Initial Offer Period dates were not yet announced at the time of writing, so check the AMC’s website before applying.
Unlike a regular HDFC Mutual Fund scheme, this one is not registered with SEBI. It falls under the International Financial Services Centres Authority, or IFSCA, the single regulator for GIFT City. The scheme passively tracks the MSCI World Index by investing in the UBS Core MSCI World UCITS ETF.
Resident Indians wanting developed market exposure, outside India’s overseas investment ceiling, may find this launch worth a look. Investment happens in US dollars, typically remitted under the RBI’s Liberalised Remittance Scheme.
HDFC International – Developed Markets Equity Fund NFO details
Fund name | |
Fund type | Open-ended, fund of funds |
Category | Passive fund of funds, GIFT City IFSC retail scheme |
Nature of scheme | Tracks the MSCI World Index via an underlying ETF |
Benchmark | MSCI World Index |
Fund manager | Mr. Yash Sanghani |
Initial Offer Period opens | Not available |
Initial Offer Period closes | Not available |
Allotment date | Not available; NAV disclosed within 30 business days of closure |
Minimum investment | USD 5,000 |
Additional investment | USD 500 |
SIP amount | Not available |
NAV during Initial Offer Period | USD 100 per unit |
Stamp duty | Not available |
Entry load | Not available |
Exit load | 2% within 1 year, 1% within 2 years, nil after |
HDFC AMC International (IFSC) Limited: AMC details
AMC name | HDFC AMC International (IFSC) Limited |
Assets under management | Not available |
Website | |
Registered office | 1115-A, Block 13-B, Zone 1, 11th Floor Hiranandani Signature, SEZ GIFT City, Gandhinagar, Gujarat, 382355 |
Contact number | +079-69286110 |
Source: HDFC AMC International (IFSC) Limited, IFSCA FME Registration No. IFSCA/FME/III/2023-24/073
What has HDFC AMC International launched?
HDFC AMC International (IFSC) Limited, a wholly owned subsidiary of HDFC Asset Management Company Limited, has launched an open-ended fund of funds. A fund of funds does not buy shares directly. It invests in units of another fund, called the investee fund, and passes on that fund’s performance.
Here, the investee fund is the UBS Core MSCI World UCITS ETF, which holds a broad basket of developed market shares, reaching thousands of companies across the US, Europe, Japan and other developed economies.
The scheme is passively managed, so there is no fund manager picking individual stocks. The goal is to mirror the MSCI World Index, which tracks large and mid-sized companies across 23 developed markets. The Investment Manager may swap the investee fund if needed, but the aim stays fixed: track the index, not beat it.
Being an IFSCA scheme, everything is in US dollars, remitted usually under the RBI’s Liberalised Remittance Scheme, capped at USD 250,000 per person a year. GIFT City sits outside SEBI’s overseas investment ceiling, one reason more such funds keep launching there.
How does this fund work?
At the top sits the HDFC International – Developed Markets Equity Fund, collecting investor money. Underneath sits the UBS Core MSCI World UCITS ETF, doing the actual stock holding.
Step | What happens? |
1 | You remit US dollars, typically via the RBI’s Liberalised Remittance Scheme. |
2 | The fund allots units at USD 100 during the Initial Offer Period. |
3 | The scheme pools this money with other investors’ contributions. |
4 | Up to 100% of the corpus buys units of the UBS Core MSCI World UCITS ETF. |
5 | A small portion, up to 5%, stays in cash for liquidity. |
6 | The underlying ETF tracks the MSCI World Index and rebalances with it. |
Let’s understand this fund through an example
Say an investor remits USD 5,000, the minimum ticket, during the Initial Offer Period. At USD 100 per unit, that buys 50 units of the Direct Plan.
The fund passes that USD 5,000, less a small cash buffer, into the UBS Core MSCI World UCITS ETF. As that ETF’s holdings move, the fund’s NAV moves with it, adjusted for fees and tracking error. This illustrates the mechanism only, not a projected return.
Portfolio allocation
This is a single strategy fund of funds, so there is no multi-asset table. Per the offer document, 95% to 100% goes into units of the UBS Core MSCI World UCITS ETF, with the remaining 0% to 5% in cash for redemptions and expenses. No separate debt, REIT or InvIT allocation exists.
Investment strategy behind this GIFT City fund
Two mechanics matter most here: cost stacking and tracking difference.
Cost stacking means paying expenses at two levels: this fund’s TER, capped at 0.50% for the Direct Plan and 1.00% for the Regular Plan, plus the underlying ETF’s own costs on top.
Tracking difference is the gap between the index’s actual return and what you eventually receive, from fees, cash drag, currency timing and the ETF’s own tracking error. The Investment Manager aims to keep this narrow, though it can widen during volatile periods.
Liquidity works through NAV, not an exchange. Unlike the ETF, which trades intraday, units here are bought and sold only through the AMC, at NAV, once a day.
Potential benefits of this fund
Potential benefit | Why does it matter? |
Access to developed markets | Reaches thousands of companies across the US, Europe, Japan and other developed economies via one fund. |
Outside SEBI’s overseas cap | Sits outside the ceiling that has kept many domestic international funds closed to new money. |
Passive, rules based approach | No dependence on a fund manager’s stock picks; the fund tracks its benchmark. |
Currency diversification | Dollar denominated assets can offset some rupee depreciation over the long term. |
Familiar experience | You still buy and redeem units and track a daily NAV, as with a domestic fund. |
Key risks in this fund
Risk | What does it mean? |
Concentration risk | The fund’s fortunes are closely tied to the single underlying ETF it invests through. |
Tracking error | Returns may not exactly match the MSCI World Index due to fees and cash holdings. |
Currency risk | Returns are in US dollars, so rupee investors face dollar to rupee swings too. |
Liquidity risk | Units redeem only via the AMC at NAV; the underlying ETF’s own liquidity can vary. |
Regulatory risk | Some SEBI-style investor protections may not apply the same way under IFSCA. |
Market risk | Value moves with developed market equity prices and can fall as well as rise. |
Who may consider this fund?
Investor type | Why it may fit |
Seeking developed market exposure | Gets a broad developed markets index through one fund. |
Comfortable with LRS remittance | Willing to remit funds abroad and hold a dollar denominated investment. |
Long term goal investors | Building a multi year overseas equity allocation within a broader portfolio. |
Can meet the USD 5,000 ticket | Comfortable with a higher minimum than typical domestic NFOs. |
Who may not find it suitable?
Investor type | Why it may not fit |
Needing INR liquidity soon | The fund is dollar denominated, so near term rupee needs are better met elsewhere. |
Unable to use LRS | Lacking the documentation or annual LRS headroom to invest. |
Wanting guaranteed returns | An equity index fund of funds offers no assured or guaranteed returns. |
Seeking active management | This fund never tries to beat its benchmark. |
This fund vs traditional options
Feature | FD | Debt Fund | Hybrid Fund | Equity Fund | This Fund |
Risk | Low | Low-mod | Moderate | High | High + currency |
Return potential | Fixed | Modest | Moderate | High | Developed markets |
Volatility | Minimal | Low | Moderate | High | High |
Liquidity | Limited | High | High | High | AMC, USD |
Horizon | Short-med | Short-med | Med-long | Long | Long |
Suitable investor | Capital safety | Conservative | Balanced | Growth | Global equity seekers |
Review by Zenith Finserve
This fund is a straightforward way to add developed market equity exposure without opening a separate offshore brokerage account. Its passive design means the outcome largely mirrors the MSCI World Index, adjusted for fees and tracking error.
It suits an investor with a long horizon, perhaps ten years or more, who already holds core domestic equity and wants exposure outside India. It fits less well as a short term holding, given the USD 5,000 ticket, the LRS step, and the added currency risk.
Weigh your international exposure, comfort with currency swings, and annual LRS headroom before committing, and consult a financial or tax adviser given the cross border nature of this fund.
How Zenith Financial Management can help
At Zenith Financial Management, we follow a process driven investment framework. We assess your goals, cash flows, risk profile, time horizon, existing investments, loans and tax situation before suggesting investments.
We align our investment suggestions with your financial objectives and review them periodically to keep them suitable as your circumstances change.
Similar NFOs on Zenith
Zenith has not yet published coverage of another GIFT City or IFSCA regulated fund of funds, so there is no genuinely comparable article to link here. This is worth revisiting once more GIFT City launches are covered.
For related reading meanwhile, see Zenith’s guide to GIFT City investments for NRIs and comprehensive guide to mutual funds in India.
Frequently asked questions
What is the HDFC International – Developed Markets Equity Fund?
A fund of funds from HDFC AMC International (IFSC) Limited, at GIFT City, tracking the MSCI World Index via an overseas ETF.
Is this NFO good to invest in?
Depends on your goals, horizon and comfort with currency risk. This article is factual, not a recommendation.
Who regulates this fund?
IFSCA, the International Financial Services Centres Authority. It is not a SEBI registered mutual fund.
What is the minimum investment?
USD 5,000 for both plans, plus USD 500 for additional investment.
How do resident Indians invest in this fund?
Usually by remitting dollars under the RBI’s Liberalised Remittance Scheme, capped at USD 250,000 per person a year.
What does the fund invest in?
Units of the UBS Core MSCI World UCITS ETF, holding developed market shares that track the MSCI World Index.
What is the expense ratio?
Capped at 0.50% for the Direct Plan and 1.00% for the Regular Plan, plus costs at the ETF level.
What is the exit load?
2% within one year, 1% within two years, nil after.
Who is the fund manager?
Mr. Yash Sanghani, Additional Key Managerial Personnel at HDFC AMC International (IFSC) Limited.
What is tracking error, and does it apply here?
The gap between a fund’s returns and its benchmark’s. This scheme aims to minimise it, though some difference is normal.
Does this fund carry currency risk?
Yes. Dollar returns mean rupee investors also face exchange rate movements on top of market risk.
