NRI focus: Accessing global markets through the GIFT City route

A recent webinar titled "The Indian Investor Goes Global: The GIFT City Route to World Markets" was hosted by PMS Bazaar and featured Mihir Shirgoankar, Head of Alternate Investments, Fund Manager, Global PMS, Philip Ventures, IFSC. The webinar provided valuable insights for foreign or NRI investors interested in the Indian market.

The discussion covered a broad range of topics. Shirgoankar shared his perspective on global investment strategies and portfolio management techniques. He also delved into the background of Philip Capital Group, explaining its significance. The webinar explored the growing importance of Gift City, a financial hub in India, for global investments. He addressed the operational advantages that Gift City offers to investors.

Key aspects covered in this webinar blog are

Navigating global opportunities
Investment philosophy and strategies
Benefits of establishing a business within GIFT City
Short-term and long-term trends
Global investment strategies and portfolio management

Navigating global opportunities

Mihir Shirgoankar started his presentation by introducing Philip Capital Group, a Singaporean financial powerhouse with over 40 years of experience. With a presence in more than 15 countries, the group is a major player in both Southeast Asia and the West. He highlighted their significant asset management (over $35 billion) and diverse financial product offerings, with India being a key market.

Shirgoankar then discussed the importance of Gift City, a financial hub designed to streamline investments in India. He mentioned Philip Capital's early entry into Gift City and its journey since launching its global portfolio management services (PMS) in January 2022. This initiative has attracted both Indian residents and non-residents.

Shirgoankar addressed a crucial question: why consider global allocation when the domestic economy is promising? He presented data showcasing the performance of global equity markets over the past 14 years. While India performed well, significant returns came from the American markets too. He explained how rupee depreciation could magnify returns for Indian investors in dollar-denominated portfolios, using the S&P 500 as an example.

Looking ahead, Shirgoankar emphasised his company’s strategy of capturing emerging trends and innovative ideas. While India remains a strong market, global opportunities in sectors like artificial intelligence, electric vehicles, sustainability, and semiconductors offer unique potential not readily available within the Indian equity space alone.

Shirgoankar then explained their unique investment approach that focuses on investing in equity ETFs instead of individual stocks. He elaborated on the four pillars of their investment philosophy:

Fundamental Focus: Deep understanding of businesses, regions, and asset classes to evaluate global equity returns.
Quantitative Analysis: Data-driven approach using coding and programming expertise to make the investment process more scientific and efficient.
Long-Term Outlook: Low-churn portfolio with a long-term perspective to minimise taxes and trading costs.
Seamless Implementation: Leveraging the ease of doing business within the Gift City ecosystem to ensure a hassle-free investment experience for clients.

Benefits of establishing a business within GIFT City

Shirgoankar then shifted his focus to the benefits of Gift City for businesses. He highlighted the ease of doing business facilitated by the International Financial Services Center's (IFSC) proactive regulatory body. Industry-focused committees within Gift City were established to swiftly address business challenges. Additionally, attractive tax holiday schemes offered significant advantages to entities operating within Gift City.

For investors, Shirgoankar emphasised the absence of Goods and Services Tax (GST) in Gift City, simplifying operational complexities. Resident Indian investors could leverage Gift City's status as an offshore jurisdiction to invest in global markets, eliminating the need for offshore accounts elsewhere. Foreign investors, on the other hand, gained easy access to Indian asset managers through Gift City, streamlining investment processes and fostering mutually beneficial relationships.

Shirgoankar then addressed audience queries. He provided insightful explanations on currency fluctuations, considering both short-term cycles and the long-term trend of rupee depreciation.

He explained the merits of passive investment strategies using market data and historical performance. He argued that ETFs offered advantages in mitigating risk and capitalising on thematic investment trends.

Short-term and long-term trends

Shirgoankar explored the complexities of current trends and future investment opportunities. He distinguished between short-term trends and long-term themes. In the next 1-3 years, he anticipated rate cuts by major central banks, potentially benefiting the technology and metals sectors due to a weaker dollar and increased demand. Looking further ahead (5-7 years), Shirgoankar envisioned a future driven by interconnectedness, artificial intelligence, and sustainability. He highlighted infrastructure, particularly data centres and water sustainability projects, as promising areas for investment. He addressed taxation concerns by emphasising a long-term perspective and projected 12-14% annual returns in US dollars. Shirgoankar's insights provided a valuable perspective on the evolving investment landscape and potential future opportunities.

Global investment strategies and portfolio management

Shirgoankar addressed several key areas related to the investment strategy. First, he clarified the portfolio's global reach, with a focus on US-listed ETFs (around 60% allocation) but also including developed markets like Japan and Taiwan, emerging markets like China and South America, and select European countries. He emphasised careful ETF selection, where his team analyses holdings across different ETFs to choose those with the best fit for their investment goals in terms of concentration, diversification, and alignment.

On portfolio management, Shirgoankar stressed a disciplined, long-term approach focused on value creation rather than market timing. He highlighted the importance of patience and staying true to investment principles, especially during market volatility.

When discussing risks, Shirgoankar acknowledged data insufficiency as a challenge, particularly for specific industries. To address this, his team utilises various data sources and proprietary tools to ensure access to timely and reliable information.

Finally, Shirgoankar discussed the operational benefits of Gift City. While acknowledging lower operational costs, he emphasised the importance of a physical presence within Gift City for optimal business operations, as opposed to relying solely on virtual setups.

The webinar covered these topics in detail and concluded with a Q&A session. You can watch the recording for a more in-depth look at these insights.