High-Net-Worth Individuals (HNIs) and Family Offices Diversify into Offshore Assets
With domestic equities underperforming compared to global markets, HNIs and family offices are increasingly investing in offshore assets through Portfolio Management Services (PMS) and Alternative Investment Funds (AIFs) located in Gujarat International Finance Tec-City (GIFT City).
Investment Trends
- There has been a significant increase in AIF allocations overseas, with investments in foreign jurisdictions reaching $1.43 billion as of June, a 70% increase from $842 million in March.
- PMS assets in GIFT City rose by 23% to $1.46 billion during the April-June quarter, up from $1.18 billion at the end of March 2025.
Market Performance
- Between January and August 2025, the MSCI Emerging Markets Index gained 24%, MSCI World increased by 11%, and MSCI Europe surged 26%, while MSCI India grew only 2%.
- Investors are showing a preference for small and midcaps in Europe and North America, particularly those that are market leaders, due to lower valuations and faster growth compared to Indian companies.
Strategic Investments
- Saurabh Mukherjea, founder and CIO of Marcellus Investment Managers, notes that outbound investment strategies through PMS and Category III AIFs at GIFT City have reached ₹300 crore, with commitments of ₹500 crore expected in the next 6-12 months.
- Allocations are being made via the overseas portfolio investment route.
PMS Client Growth
- The number of PMS clients in GIFT City increased to 221 in June from 144 in March.
- Major fund houses such as PhillipCapital, Mirae Asset, DSP Asset Managers, and Aditya Birla Sun Life Insurance have launched investment strategies from GIFT City.
Benefits of GIFT City
- Prashant Tandon of Waterfield Advisors highlights that PMS in GIFT City offers an institutional route for global diversification without using up the $250,000-a-year Liberalised Remittance Scheme quota per investor.
- The financial center acts as a tax-efficient gateway, allowing access to specialist managers in the US, Europe, or EMs, which is favorable for HNIs facing challenges like earnings downgrades and regulatory complexities.
