PPFAS to launch three passive and active global FoFs to tap international opportunities

Neil Parag, PPFAS Mutual Fund

Parag Parikh Financial Advisory Services, more commonly known as PPFAS, is set to launch three new international equity FoFs, aimed at helping investors diversify their portfolios towards global offerings. This update comes from a fund house that has just equity key equity offerings: the Parag Parikh Flexi Cap Fund and Parag Parikh ELSS Tax Saver Fund.

At the Moneycontrol Mutual Fund Summit, held on October 27 in Bangalore, Neil Parikh of PPFAS said that taxation remains a key area where GIFT City structures need improvement. Funds domiciled in GIFT City are taxed on every sell transaction (churn), making the structure less efficient for active portfolio management.

To address this, PPFAS plans to focus on feeder fund or fund-of-fund (FoF) structures, where churn is not subject to capital gains tax and dividend withholding tax is lower at 15 percent compared to around 25 percent in a direct overseas setup.

Parikh noted that simply launching retail funds in GIFT City may not deliver the best outcomes unless tax efficiencies are fully leveraged. Instead, routing investments from GIFT City into established global structures allows better performance and compliance.

As a result, PPFAS will launch three such feeder funds over the next year, two passive and one actively managed. The passive funds will mirror large global indices such as the S&P 500 and NASDAQ. The active strategy will follow a flexi-cap, go-anywhere approach, investing across developed markets in businesses with global exposure.

Parikh added that the focus will remain on countries with strong rule of law and governance standards. “We do not want to get too exotic,” he said, indicating that markets like Thailand or China, where policy confidence is lower, will be avoided to protect investor interests.

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