PPFAS secures approval to roll out IFSC S&P 500, Nasdaq 100 FoF; what it means for Indian investors

PPFAS has received regulatory approval to launch two new passive outbound funds from GIFT City — the Parag Parikh IFSC S&P 500 Fund of Fund and the Parag Parikh IFSC Nasdaq 100 Fund of Fund — giving Indian investors simplified access to U.S. equities. Both schemes will invest in UCITS-compliant index funds tracking the S&P 500 and Nasdaq 100, following a fully passive strategy. Designed for Indian individuals, corporates, trusts, and partnership firms, the funds are benchmarked to the S&P 500 Net TRI and Nasdaq 100 Notional Net TRI, respectively.

Each unit is priced at US$100, with daily NAV calculation, no lock-in, and no exit load. The funds offer two classes: Class A (Direct) with a minimum investment of US$5,000 and a 0.30% TER, and Class B (Regular) with the same minimum but a 0.60% TER.

PPFAS highlights key advantages, including no U.S. inheritance tax, simplified tax compliance due to fund-level taxation, and lower forex and transaction costs. The OPI route is allowed only via GIFT-based pooled vehicles, ensuring regulatory ease. Each scheme will allocate 90–100% to ETFs and UCITS tracking their respective indices and 0–10% to debt instruments.

One of the biggest differentiators of this GIFT City product is its tax structure. Taxes are paid at the fund level, significantly reducing compliance burden for investors. If redeemed within two years, gains are taxed at 42.7%, while holdings above two years are taxed at a much lower 14.95%. Importantly, investors avoid U.S. estate tax and Schedule FA disclosures, removing two major concerns associated with direct U.S. investing.

Cost efficiency is another highlight. The direct plan is expected to have a 0.3% expense ratio, and the regular plan around 0.6%, while the underlying UCITS ETF adds about 0.1%. This brings the total estimated cost for direct investors to 0.4–0.5%, making it one of the most competitively priced international options for Indian investors. PPFAS said the online onboarding journey will be live on the PPFAS IFSC website within a month.

Why the S&P 500 matters

The S&P 500 Index represents 500 of the largest US publicly traded companies and is widely regarded as the most accurate barometer of the American economy. The index is curated by a committee and uses a float-adjusted, market-cap-weighted methodology, ensuring quality-driven stock selection. Its broad sectoral representation—technology, consumer goods, healthcare, financials and more—offers diversified exposure in a single investment.

For Indian investors seeking long-term dollar-denominated equity exposure, S&P 500 index funds have become increasingly popular. The index has historically delivered strong returns, with companies such as Nvidia, Apple, Microsoft, Amazon, Meta, Netflix, Tesla and Walmart driving innovation and long-term performance.

Regulatory changes in 2020 gave rise to funds like the Mirae Asset S&P 500 Top 50 ETF and the Motilal Oswal S&P 500 Index Fund, enabling easier access for retail investors. The new PPFAS IFSC fund now adds a more tax-efficient, low-cost alternative routed through GIFT City.

Mirae Asset S&P 500 Top 50 ETF vs Motilal Oswal S&P 500 Index Fund

Both funds offer exposure to the U.S. equity market but differ significantly in structure and risk.
Motilal Oswal S&P 500 Index Fund tracks the entire S&P 500 and holds about 501 stocks, offering broad diversification across sectors and reducing concentration risk. Its technology weight is around 48%, reflecting the index’s natural composition.

Mirae Asset S&P 500 Top 50 ETF, launched in 2021, tracks only the largest 50 U.S. companies. Its portfolio of 51 stocks is heavily dominated by mega-cap tech companies, with technology accounting for 64% of the fund. This has boosted returns in years when tech stocks surged, especially during the 2023–24 rally. However, the concentration also results in higher volatility.

Motilal Oswal suits investors seeking steady, broad-based exposure to the U.S. market, while Mirae is designed for those who want higher growth potential and can tolerate bigger swings. Both require a long-term horizon of at least five years.

At a glance

Feature           Mirae Asset S&P 500 Top 50 ETF    Motilal Oswal S&P 500 Index Fund

Benchmark    S&P 500 Top 50 Index                      S&P 500 Index
Launch Date   Sep 2021                                         Apr 2020
No. of Stocks    51    501
Portfolio Style    Highly concentrated, mega-cap heavy    Broad, diversified US market
Top Sector Weight    Technology ~64.5%    Technology ~48%
Top Holdings    NVIDIA, Apple, Microsoft,              NVIDIA, Apple, Microsoft, Amazon, Alphabet
Amazon, Alphabet    
NAV (Latest)    Rs 57.36    Rs 27.09
1-Year Return    Higher    Moderate
3-Year Return    Higher    Lower
Risk (Std. Deviation)    13.95 (higher volatility)    12.04 (lower volatility)
Expense Ratio    0.06–0.60%    0.06%
AUM    Rs 1,004 crore    Rs 4,092 crore
Investment Strategy    Top 50 mega-cap US companies    Entire S&P 500 market-cap weighted
Ideal For    High-growth, concentrated exposure    Broad US diversification
Minimum Investment    Rs 5,000    Rs 500
Exit Load    Nil    1% within 7 days

With the launch of the Parag Parikh IFSC S&P 500 Fund of Fund, PPFAS aims to offer a cleaner, simpler, and more tax-efficient route for Indians looking to participate in the growth of America’s largest companies—while bypassing the complexities of direct global investing.