Unifi G20 Fund

The G20 fund is a GARP  investor in 15-25 large-cap Global US-listed businesses that drive the world in pioneering innovation and international expansionism. Such businesses are not listed in India, making them unique and a good complement to Indian equities. This offers investors a chance to tap into global growth while diversifying across market cycles.

The fund is an open-ended Category III AIF, domiciled in GIFT City (IFSC) and regulated by the IFSCA.

The fund has a monthly dealing/valuation day. Purchases or redemptions are made once a month on the last working day.

At the Fund level, for trades held for less than 2 years, the gains are taxed at the Maximum Marginal Rate (MMR). For trades held for more than 2 years (Considered long-term), the tax rate is 12.5% plus applicable charges.

For investors, the returns are post-tax. Hence, no additional tax needs to be paid on them.

No. The Fund is a non-resident of the US and hence does not pay any capital gain tax in the US on the sale of the equities. As a result, capital gains tax is paid only in India, as explained in Q.4.

Dividends declared by US-listed companies are subject to a 25% withholding tax in the US. Under the Double Taxation Avoidance Agreement (DTAA) between India and the US, the fund pays only the difference (if any) between this 25% and the applicable tax rate in India.

The fund aims to seek quality capital from like-minded, long-term investors. Unifi will work closely with distributors and investors to set a clear expectation of a minimum investment horizon of three to five years. Although the fund is open-ended, we intend to discourage short-term participation. To ensure alignment, each investment is subject to a two-year hard lock-in period from the date of investment. The 2 years is applicable for additional purchases as well.

There is no exit load, apart from the two-year lock-in period.

Any resident Indian – Individual or Non-Individual – can invest in this fund. Resident individuals invest through the Liberalised Remittance Scheme (LRS), while non-individuals such as Registered Partnerships, LLPs, Private and Public Limited companies can use the Overseas Portfolio Investment (OPI) route.

NRIs are advised not to invest in this fund due to tax inefficiencies. Typically, NRIs are not subject to capital gains tax in India on direct investments in foreign equities. However, investing through this fund would result in indirect exposure to post-tax returns at the fund level, which may reduce overall tax efficiency for NRI investors.

The minimum investment is USD 150,000, with additional investments in multiples of USD 10,000.

For Accredited Investors (AIs) who meet the eligibility criteria defined by the IFSCA, the minimum investment is USD 60,000, with top-ups in multiples of USD 5,000. If you would like to invest less than USD 60K as AI, reach out to our relationship manager.

Criteria for AI: Click here

Under the Liberalised Remittance Scheme (LRS), a resident Indian individual can remit up to USD 250,000 per financial year. While initiating the remittance, the investor should select the below purpose code

As per current regulations, Tax Collected at Source (TCS) is levied at 20% on remittances exceeding INR 1,000,000 in a financial year.

For example, if an investor remits USD 100,000 at an exchange rate of INR 85/USD, the total remittance amounts to INR 8,500,000. TCS is applicable on the amount exceeding INR 1,000,000—that is, on INR 7,500,000. The TCS payable would be INR 1,500,000 (20% of INR 7,500,000). This amount is debited separately from the investor’s bank account after the remittance is processed.

Investors can also offset this TCS against the TDS payment or Advance tax as per the recent guidelines. We suggest to take the advise of your CA or tax consultants for such matters.

Yes, the Funds held in the foreign bank account on account of sale of any foreign investments can be transferred to the Unifi G20 Fund bank account. Such transfers don’t count under your current year LRS limit.

However, you cannot transfer the shares held outside to the Unifi G20 Fund directly.

No. For funds domiciled in GIFT City (IFSC), unlisted Indian entities do not require prior RBI approval to invest. GIFT City remains the only overseas jurisdiction where such entities are permitted to make Overseas Portfolio Investments (OPI) into investment funds, as per Schedule V of the OI Directions under FEMA.

Investors can remit funds in USD through their authorised bankers under the OPI route. For further assistance, they may contact our Investor Relations team.

No. There is no risk of US estate tax upon the demise of an individual investor, as the Fund—not the investor—legally owns the underlying US equities.

Investors hold units in the Fund, not direct ownership of the US assets, and have a beneficial interest only to the extent of their unit holdings.

In contrast, individuals holding US assets directly exceeding USD 60,000 may be subject to US estate tax under current regulations.

This investment should be disclosed under Schedule FA (Foreign Assets) of your ITR. Schedule FA requires the reporting of foreign assets you hold or have any beneficial interest during the relevant calendar year.

For investors in the G20 Portfolio, only the Fund needs to be reported—not the underlying individual stocks or securities. This significantly simplifies the foreign asset disclosure requirements for ITR

The table below summarises the relevant section within Schedule FA for this disclosure.

In 2008, the RBI imposed an industry-wide cap of $7 billion on international investments by Indian mutual funds. This limit was fully utilised by February 2022, forcing mutual funds to suspend any further investments abroad. Since then, mutual funds have not been able to issue fresh, non-dilutive units to investors since then.

As a result, investors seeking meaningful international allocation through mutual funds are currently limited to just two options:

The G20 Portfolio has been carefully designed in accordance with the regulatory framework that caters specifically to High Net worth Individuals (HNIs) who are committed to building international portfolios. Leveraging the GIFT City IFSC framework, the Fund is empowered to invest actively in a concentrated portfolio of 100% international equities, thus overcoming the limitations associated with traditional Mutual Funds.

In addition to its regulatory advantages, the G20 Portfolio has distinct competitive advantages over MFs for the following reasons, irrespective of taxes at the fund level:

1. In-House Expertise: Over the past three years, Unifi has built a dedicated global equities research team from the ground up, developing the expertise to support international portfolio research entirely in-house. Additionally, Unifi has formed partnerships with leading global sell-side advisors for enhanced research
2. Proven GARP Investment Philosophy: Unifi’s time-tested Growth at a Reasonable Price (GARP) philosophy is universally applicable. This approach, grounded in the principles of value investing, provides a margin of safety and serves as a strong driver of investment
3. Focus on Structural Growth: The Fund’s investment universe funnel follows a focused strategy that exposes G20 to the dual forces of innovation and international expansion, positioning the portfolio to capitalize on deeply structural This approach sets the stage for long-term, low-turnover investing, which ultimately should generate tax- efficient returns.
4. Concentration on Top Global Businesses: The G20 Portfolio focuses on selecting the world’s 20 most powerful businesses. This concentration strategy enables the portfolio to deliver returns that are significantly differentiated from the benchmark.

The G20 Portfolio is benchmarked against the MSCI World Large-Cap Index, which best represents the Fund’s investment universe. It will be investing in businesses that are leaders across sectors in the developed markets.

Yes and no.

The G20 Portfolio invests in some of the world’s largest and most prolific businesses, with a majority (approximately 68%) headquartered in the US. However, the Fund also invests in non-US Developed Market businesses (primarily from Europe and Japan) through US-listed ADRs (American Depository Receipts).

ADRs are shares of foreign companies that trade on US exchanges. Investing in ADRs brings the best of the world into the G20 fund while sparing the fund’s investors from the regulatory and tax compliance that would otherwise come from investing in each foreign country.

In terms of the number of companies, The G20 Portfolio’s investment universe has a ~16% and

~28% overlap with the S&P 500 and Nasdaq 100 respectively.

The majority of the global businesses that are in the G20 investment universe have ADRs that are listed in the USA, negating the need for the Fund to trade on any foreign exchanges.

The fund intends to buy or sell only on US exchanges for several reasons:

1. For ease of operation
2. To avoid cross-currency risk
3. To avoid multi-jurisdiction Tax C regulatory
4. To benefit from the world’s most stable and highly regulated jurisdiction.