Gateway to Global Investing: Strategic Access through GIFT City

PMS Bazaar recently organized a webinar titled “Gateway to Global Investing: Strategic Access through GIFT City,” which featured Mr. Alok Kumar, Head – Alternate Products & Special Mandates, Aditya Birla Sun Life AMC Limited and Mr. Rudy Gopalakrishnan, Fund Manager, Lyptus Capital Global Fund.

The webinar blog covers insights from Mr. Kumar and Mr. Rudy, which included expert insights, which primarily covered GIFT City as India's emerging global financial hub, Aditya Birla Sun Life AMC's role within it, and the investment opportunities available to both domestic and foreign investors through their GIFT City-based funds, highlighting tax benefits and global diversification

Key aspects covered in this webinar blog are

Introduction to GIFT City: India's emerging financial hub
Aditya Birla Sun Life AMC's role in GIFT City
Investment opportunities in GIFT City through Aditya Birla Sun Life AMC
Aditya Birla Sun Life AMC's investment solutions
Portfolio construction and diversification strategy
Dominance and pricing power of key holdings
Market share gains and competitive advantages
Addressing market bubbles and valuations
Global and Indian market comparisons
Insights into U.S. market compellingness and investment strategy
Ensuring reasonable valuations for long-term growth

Summary: Mr. Alok highlighted GIFT City as India's financial hub, offering tax incentives and a unique offshore status for global investors. He discussed Aditya Birla Sun Life AMC's role in GIFT City, securing a non-retail fund management license, and offering diversified investment products. Mr. Rudy elaborated on the portfolio strategy, emphasizing market dominance, pricing power, and diversification across sectors. He also addressed market valuations, highlighting the U.S. market's appeal and the importance of maintaining reasonable valuations for long-term growth.

GIFT City: India's Emerging Global Financial Hub

Mr. Alok explained that GIFT City (Gujarat International Finance Tec-City) is India’s flagship financial initiative, aimed at positioning the country as a global financial hub. Spread across 2,000 acres near Gandhinagar, it is the only approved International Financial Services Centre (IFSC) in India. A joint venture between the Government of Gujarat and the central government, GIFT City operates as an offshore financial jurisdiction. It offers tax incentives and functions under a unique regulatory framework led by the International Financial Services Centres Authority (IFSCA), attracting global financial players.

Aditya Birla Sun Life AMC's Role in GIFT City

Mr. Alok discussed Aditya Birla Sun Life Asset Management Company’s (ABSL AMC) early and growing role in GIFT City. In November 2022, ABSL AMC became one of the first to receive a non-retail fund management entity license in the IFSC. This license allows the firm to manage restricted schemes under Alternative Investment Funds (AIF). Since receiving the license, ABSL AMC has launched multiple funds and is actively raising capital through three offerings, with two already completed.

Investment Opportunities Through Aditya Birla Sun Life AMC in GIFT City

He elaborated on the investment opportunities ABSL AMC offers through GIFT City, for both domestic and international investors. GIFT City’s special status enables ABSL AMC to design products with significant tax advantages. For foreign nationals and NRIs, the platform offers simplified paperwork, no need for NRI-specific accounts, exemption from Indian tax laws like TDS, and full repatriability. These investors can access top-tier Indian mutual fund strategies while being taxed only in their home countries.

Indian residents can also benefit. Through GIFT City, they can build long-term overseas portfolios, something not feasible through regular domestic mutual funds. Investors can use their $250,000 annual Liberalized Remittance Scheme (LRS) limit to gain exposure to global markets, enabling better diversification and helping them achieve their dollar-denominated financial goals.

Aditya Birla Sun Life AMC's Investment Solutions

Mr. Alok outlined ABSL AMC’s suite of investment solutions for both inbound and outbound strategies. Inbound solutions give global investors access to Indian mutual funds, while outbound offerings enable exposure to global markets. One flagship product is the ABSL Global Blue Chip Equity Fund, which invests in high-quality global companies not typically accessible via Indian markets. ABSL AMC also partners with Lyptus Capital, with thier Blue Chip Equity Fund investing fully through Lyptus, allowing participation from both domestic and international investors in this global strategy.

Portfolio Construction and Diversification Strategy

Mr. Rudy shared insights into how the global portfolio is constructed. It typically holds around 30 stocks with a 70% active share, focusing on high-conviction ideas. The portfolio limits any country or sector overweight or underweight to within 15% of benchmark weights to ensure broad diversification and reduce overexposure to sectors like U.S. tech or European industrials.

Stocks that are favored are overweighted by approximately 3%, while less attractive ones are excluded. For companies not in the index but with strong prospects, a 3% allocation is made. This active approach allows for a focused yet diversified portfolio.

Dominance and Pricing Power of Key Holdings

Mr. Rudy emphasized that many portfolio companies enjoy dominant market positions. For instance, Amazon and ASML hold about 40% and 97% market share respectively in their segments, which provides them with significant pricing power. This dominance allows them to pass on costs to consumers, insulating them from inflationary pressures and economic shocks.

Such market strength makes these businesses more resilient and well-positioned for long-term value creation. Mr. Rudy added that while dominance can evolve, the fund’s approach is to back companies and management teams with a consistent record of navigating varied market cycles.

Market Share Gains and Competitive Advantages

He discussed the importance of companies gaining or maintaining relative market share. Firms with monopolistic or duopolistic structures are preferred, as they typically enjoy durable competitive advantages, whether through customer stickiness, scale efficiencies, or lower production costs. These businesses often generate returns on capital well above their cost of capital, making them ideal long-term holdings.

Addressing Market Bubbles and Valuations

When asked about potential bubbles, especially in tech, Mr. Rudy clarified that—aside from Tesla—most large tech firms are not overvalued. He argued that the so-called "Magnificent Seven" stocks have delivered outsized long-term performance, with robust fundamentals.

He highlighted how companies like Google and Meta have improved margins by leveraging AI to refine targeted advertising, which has driven significant free cash flow growth. According to Mr. Rudy, these firms remain financially healthy and viable for long-term investment, despite occasional short-term underperformance.

Insights into U.S. Market Compellingness and Investment Strategy

Mr. Rudy addressed why the fund remains overweight on the U.S. market. He cited three reasons: consistent long-term performance, a strong legal framework similar to India’s, and the disciplining effect of twin deficits in both economies. These factors collectively make the U.S. a reliable investment destination.

Although the fund primarily targets U.S. and Indian companies, it remains open to exceptional businesses in Europe and Asia, employing a bottom-up selection method. Mr. Rudy noted that returns from other regions are adjusted for currency depreciation, aligning the fund’s strategy with a dollar-based perspective.

On maintaining conviction in top holdings like NVIDIA and Microsoft despite high valuations, Mr. Rudy challenged the assumption that these stocks are overpriced. He pointed to NVIDIA’s strong five-year returns and manageable forward P/E, which he believes remains reasonable. Microsoft, too, has a dominant market position and a track record of consistency, justifying its valuation.

Ensuring Reasonable Valuations

To address concerns around buying at high valuations, Mr. Rudy shared the team’s discipline in selecting stocks. They aim to invest in dominant businesses trading at 25–30 times earnings, aligned with their long-term compounding philosophy. This is in contrast to chasing “cheap” stocks with weak fundamentals, a mistake he likened to the poor long-term performance seen in some segments of Indian banking.

He stressed the importance of combining valuation discipline with a portfolio construction framework suited to a three-to-five-year investment horizon. The fund’s four-year lock-in period is intentionally designed to encourage long-term thinking and investor alignment with the fund’s goals.

Mr. Rudy and Mr. Alok wrapped up the session by answering audience questions.

To explore more insights by watch the full webinar using the link below.