#GIFTCityFund #BarodaBNPP #USSmallCap #GlobalDiversification #IFSCA #SEBICap #IndianInvesting #HNI #LRS #FinanceNews
Chandigarh: In a landmark move set to redefine global diversification options for Indian investors, Baroda BNP Paribas Asset Management (Baroda BNP Paribas AMC) has launched the Baroda BNP Paribas GIFT US Small Cap Fund through its GIFT City branch. The fund house proudly claims this is the first fund in India to offer direct access to US small-cap equities via an International Financial Services Centres Authority (IFSCA)-regulated structure.
This launch is a critical development, particularly as many India-domiciled mutual funds have been constrained by the SEBI’s industry-wide $7 billion cap on overseas investments, effectively blocking fresh allocations to international markets. By establishing the fund in GIFT City, which is treated as a foreign jurisdiction under FEMA (Foreign Exchange Management Act) for this purpose, Baroda BNP Paribas AMC has created an alternative, regulated dollar-denominated route for investors.
The Gateway: GIFT City and the Restricted Scheme
The new scheme operates as a Restricted Scheme under GIFT City regulations, positioning it as an ideal vehicle for Resident Indians, Family Offices, High Net Worth Individuals (HNIs), and Ultra HNIs seeking substantial global exposure. The fund functions as a Feeder Fund, channeling investments into the globally established BNP Paribas US Small Cap Fund, a US-based fund managing a significant $1.4 billion in assets.
Sanjay Grover, Managing Director & CEO of Baroda BNP Paribas AMC, highlighted the strategic importance of the launch. “The new fund gives investors a much-needed additional route to allocate capital to US small-cap companies under the Liberalised Remittance Scheme (LRS),” he stated. “Earlier, many investors seeking global diversification were constrained due to SEBI’s investment cap. This GIFT City structure effectively addresses that constraint, widening access to international markets through a robust, dollar-denominated framework.”
Performance and Investment Thesis
The selection of the underlying fund—the BNP Paribas US Small Cap Fund—is underpinned by a strong track record. Data from BNP Paribas Asset Management shows the underlying fund has delivered an impressive 3-year dollar Compound Annual Growth Rate (CAGR) of $14.27\%$. Furthermore, the fund is rated 3 stars by Morningstar and has reportedly outperformed the Russell 2000 Index, the key benchmark for US small-caps, in 10 of the last 12 years.
The investment thesis for focusing on US small-caps is equally compelling. The underlying fund’s lead portfolio manager, Geoff Dailey, suggests that small-cap companies offer a crucial form of diversification.
“Small-cap companies provide broader exposure to the US economy compared with large-cap indices that are often heavily concentrated in a handful of technology stocks,” Dailey explained. He also noted that current market conditions and valuations present potential opportunities within this segment, which tends to be more domestic-focused and potentially more insulated from global geopolitical risks.
This launch by the newly established GIFT City branch of Baroda BNP Paribas AMC—registered as a Retail Fund Management Entity with IFSCA since 2024—signals a strong commitment to facilitating global investment for Indian wealth, democratizing access to specialized and high-performing asset classes that were previously difficult to reach.
#GIFTCityFund #BarodaBNPP #USSmallCap #GlobalDiversification #IFSCA #SEBICap #IndianInvesting #HNI #LRS #FinanceNews
