Alchemy India Long Term Fund: GIFT City Guide for NRIs
A 10.9% annualised return in US dollars since 2008 is the number that gets attention. The same record shows a 21.5% loss in 2022, when the benchmark fell 7.3%. An NRI evaluating the Alchemy India Long Term Fund needs to weigh both.
This guide covers what the fund is, how the GIFT City structure works, what it costs, how it is taxed, and which risks come with it. Everything here is drawn from the fund's September 2026 factsheet and presentation, its July 2026 newsletter and its tax note. It is educational, not an offer or a recommendation.
What Is the Alchemy India Long Term Fund?
The Alchemy India Long Term Fund (AILTF) is a US dollar fund that invests in Indian equities. It is domiciled in GIFT City, India's International Financial Services Centre (IFSC) in Gandhinagar, Gujarat.
- Structure: A scheme of Alchemy Alternative Investment Trust, registered with IFSCA as a Restricted Scheme (Non-Retail), described as akin to a Category III AIF.
- Investing into India: Registered with SEBI as a Category I Foreign Portfolio Investor (FPI).
- Manager: Alchemy Investment Management LLP, a registered Fund Management Entity (Non-Retail) with IFSCA and a registered investment adviser with the US SEC.
- History: Launched in June 2008 in Mauritius. Migrated to GIFT City in April 2023 with its investments and investors, so the track record runs continuously.
- Who can invest: Non-residents, including NRIs, OCI holders and global investors.
Resident Indians are excluded by design. The fund's Indian tax exemptions depend on all units, other than sponsor or manager units, being held by non-residents.
Why GIFT City Matters for NRIs
NRIs in the US and Canada often find Indian mutual funds hard to access. Many fund houses restrict them, and home-country reporting for Indian funds can be complex.
An IFSC unit is treated as a non-resident under Indian exchange control rules. Money goes in and comes out in US dollars, while the fund holds Indian equities. The fund handles Indian tax, and several home-country tax arrangements (US, UK) are set up at the fund level.
For the wider set of options available to non-residents, see the NRI Corner.
AILTF at a Glance
| Feature | Detail |
|---|---|
| Fund type | Open-ended, long-only Indian equity fund |
| Currency | US dollars |
| Domicile | GIFT City (IFSC), Gujarat |
| Regulator | IFSCA (Restricted Scheme, Non-Retail) |
| Eligible investors | NRIs, OCI holders, other non-residents |
| Minimum investment | USD 150,000 |
| Subscriptions and redemptions | Fortnightly, 1st and 16th of each month |
| Exit fee | 3% (0–12 months), 2% (13–24), 1% (25–36), nil after |
| Subscription fee | Up to 2% |
| Portfolio size | About 20–40 stocks |
| Single-stock / sector limit | 15% / 40% of the portfolio |
| Comparison benchmark | BSE 500 (USD-adjusted) |
| Administrator | ASCENT Fund Services (India) |
| Trustee | Amicorp Trustees (India) |
| Custodian | Kotak Mahindra Bank |
| Auditor | S.R. Batliboi & Co LLP (EY India) |
How the Fund Invests
The stated philosophy is Growth at a Reasonable Price: companies growing faster than average, with capable management and above-average return on capital, bought at what the team considers a reasonable valuation.
The mandate is wide. The fund is benchmark agnostic and market-cap agnostic. It may invest in listed equities, PIPEs, IPOs and pre-IPO opportunities, and listed derivatives. It does not use borrowing. New positions typically start at up to 5% and the intended holding period for a stock is generally two years or more.
As of August 31, 2026:
- Small cap: 45.8%
- Mid cap: 33.3%
- Large cap: 22.3%
- Cash and margin: -1.4% (negative due to tax provisions; the fund reports actual cash at 5.6%)
The top 10 holdings made up about 52% of the portfolio. Industrials (29.4%), financials (21.4%) and consumer discretionary (20.1%) were the largest sectors.
Close to half the portfolio in small caps, with half in 10 stocks, is the defining feature of this fund's risk. Small caps can rise sharply. They can also fall hard and stay down for extended periods, with less liquidity when selling.
Performance: The Full Record
Returns below are in US dollars, net of fees, expenses and Indian taxes, as of August 31, 2026.
| Period | AILTF (USD) | BSE 500 (USD) |
|---|---|---|
| 1 year | 11.1% | -4.5% |
| 2 years (annualised) | -0.7% | -7.3% |
| 3 years (annualised) | 13.2% | 5.7% |
| 5 years (annualised) | 7.6% | 3.9% |
| Since inception, June 2008 (annualised) | 10.9% | 5.8% |
USD 100 invested at launch grew to about USD 658, against about USD 281 for the benchmark.
The calendar-year record shows what that path looked like:
| Year | AILTF (USD) | BSE 500 (USD) |
|---|---|---|
| 2008 (from June) | -32.4% | -45.7% |
| 2011 | -31.3% | -38.9% |
| 2013 | -13.7% | -8.6% |
| 2018 | -7.1% | -11.2% |
| 2019 | -6.2% | 5.5% |
| 2020 | 0.2% | 14.0% |
| 2022 | -21.5% | -7.3% |
| 2025 | -8.1% | 1.3% |
| 2026 (Jan–Aug) | 9.8% | -7.9% |
Two patterns stand out. In broad sell-offs such as 2008 and 2011, the fund fell less than the benchmark but still lost about a third of its value. In other years, such as 2019, 2020, 2022 and 2025, it trailed the benchmark by a wide margin. In March 2020 alone, it fell 29.8%.
The long-term number belongs to investors who stayed through those years. Someone who would exit after a 20–30% fall would likely have had a very different experience.
Returns for individual investors vary by fee series and timing. Performance figures are unaudited until the annual audit. Past performance is not indicative of future results.
What It Costs
The fund offers two fee structures.
| Investment amount | Series A/B/C management fee | Performance fee | Series X/Y/Z management fee |
|---|---|---|---|
| USD 150k – 300k | 1.50% | 15% over 6% hurdle | 2.50% |
| USD 300k – 500k | 1.25% | 15% over 6% hurdle | 2.25% |
| USD 500k and above | 1.00% | 15% over 6% hurdle | 2.00% |
The performance fee is charged annually and is subject to a high-water mark. On top of this sit a subscription fee of up to 2% and exit fees for the first three years.
At every band, the flat-fee series costs 1% more in management fee. As a rough illustration, 15% of returns above a 6% hurdle equals that 1% gap at a return of around 12.7% in a year. Above that level, the performance-fee series costs more; below it, it costs less. The exact computation, including how the hurdle and high-water mark apply, is set out in the Private Placement Memorandum (PPM), which is the document to check before choosing a series.
How Tax Works
Indian tax: paid inside the fund
Under the fund's tax note, Indian tax on income attributable to non-resident investors is paid by the fund. Published returns are net of these taxes.
| Income type (non-resident portion) | Rate at fund level |
|---|---|
| Long-term capital gains, listed equity | 12.5% + surcharge + 4% cess |
| Short-term capital gains, listed equity (STT paid) | 20% + surcharge + 4% cess |
| Short-term capital gains, equity (non-STT) | 30% |
| Gains on debt securities and derivatives | Nil |
| Dividends | 10% flat |
| Interest on certain rupee bonds and G-Secs | 5% flat |
| Other interest | 10% flat |
Surcharge on capital gains is capped at 15%.
Two points are worth noting. First, investors cannot use Indian tax planning at a personal level, such as offsetting their own losses, against the fund's gains. Second, the tax note states that if Indian tax authorities take a different position later, the trustee may recover additional tax from investors, even beyond the fund's term. Fund-level tax handling reduces effort; it does not remove all Indian tax risk.
US investors: partnership treatment
The fund has elected to be treated as a foreign partnership for US federal income tax purposes. US investors receive Schedule K-1 and, where applicable, K-3 forms after each December 31 year-end and report their share of income or loss, whether or not any cash is distributed.
This differs from how many foreign pooled funds are treated under US rules, which is one reason the election exists. It also adds complexity for a US tax preparer.
UK investors: reporting fund status
The fund has held UK reporting fund status with HMRC since January 1, 2024. Per the tax note, gains on selling units are then generally taxed as capital gains rather than as income. Reported income can be taxable even if not distributed.
Singapore investors
The fund is on the Monetary Authority of Singapore's list of restricted schemes, so offers in Singapore are limited to categories permitted under Sections 304 and 305 of the Securities and Futures Act.
Everyone else
Tax in each investor's country of residence depends on local rules. The fund's own documents direct every investor to confirm their position with a qualified tax professional in their home jurisdiction, and that applies to the US, UK and Singapore points above as well.
Currency: What USD Denomination Does Not Do
A dollar NAV does not mean dollar-protected assets. The fund owns Indian companies priced in rupees. When the rupee weakens, the dollar value of those holdings falls, and the published USD returns already reflect this.
The fund's July 2026 newsletter noted that the rupee had weakened sharply year-to-date. For an NRI whose goals are in dollars, pounds or dirhams, rupee movement is part of the return, not separate from it.
Seven Points to Check Before Evaluating the Fund
- Residency status. The fund is open only to non-residents, such as NRIs, OCI holders and global investors.
- Ticket size relative to wealth. USD 150,000 is the minimum, and concentration in one strategy matters as much as the entry amount.
- Time horizon. Exit fees run for three years, and the fund's own stock holding period is generally two years or more.
- Tolerance for large drawdowns. The record includes calendar-year falls of over 30% and long stretches of trailing the benchmark.
- Comfort with concentration. Nearly half the portfolio in small caps, and about half in 10 stocks.
- Currency exposure. Rupee weakness reduces USD returns.
- Home-country tax and paperwork. K-1 reporting in the US, reporting fund rules in the UK, and local rules elsewhere, plus a full read of the PPM, since the factsheet and presentation are not the complete terms.
These points help frame the evaluation. The suitability of any investment category depends on an investor's financial goals, risk appetite, investment horizon and overall financial circumstances.
Documents for Onboarding
For individual investors, the fund lists:
- An officially valid photo ID showing name, date of birth and nationality, such as a passport
- Proof of residential address dated within the last two months
- A CRS and FATCA self-certification form
- Source of funds and wealth documents, if the investor is not from a FATF member country
Copies must be self-attested and certified by an authorised person, such as an official of a bank in a FATF-compliant jurisdiction with which the investor banks, an overseas notary, lawyer or accountant, or the investor's embassy or consulate. Documents in another language need an English translation.
Key Takeaways
- The Alchemy India Long Term Fund is a USD-denominated GIFT City fund investing in Indian equities, open only to non-residents.
- Minimum investment is USD 150,000, with fortnightly liquidity and exit fees for three years.
- Since June 2008, it has reported 10.9% a year in USD against 5.8% for the BSE 500, net of fees and Indian taxes.
- The portfolio is small-cap heavy and concentrated, and the record includes several years of steep losses or wide underperformance.
- Indian tax is paid inside the fund, though the trustee can recover additional tax if authorities take a different view later.
- US investors receive K-1 partnership reporting; UK investors benefit from reporting fund status.
- USD denomination does not remove rupee risk.
Where a Fund Like This Sits in an NRI Portfolio
A GIFT City fund can be a way for non-residents to hold Indian equity in dollars, with Indian tax handled at the fund level. This one is also concentrated, volatile and restricted in liquidity by design.
The more useful question is not whether a particular fund has done well. It is whether a concentrated, small-cap-tilted Indian equity allocation has a place in an overall portfolio, how large it would be, and how it interacts with home-country assets and taxes. For NRIs working through that question, a risk profile is a practical starting point, and it is a conversation worth having.
This post is for educational purposes only. It is not an offer, solicitation or recommendation to invest in the fund or any other product. Units are offered only to eligible investors through the fund's Private Placement Memorandum and offer documents.
Investments in IFSC funds are subject to market risks, including currency risk and possible loss of principal. Please read the Private Placement Memorandum and all offer documents carefully before investing. If investments are made through a distributor, the distributor may receive commissions or distribution fees from the fund manager. Such commissions should not influence suitability-based recommendations. Tax treatment depends on individual circumstances and may change; a qualified tax professional in the investor's country of residence is the appropriate reference.
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Frequently Asked Questions
What is the Alchemy India Long Term Fund?
Alchemy India Long Term Fund is a US dollar-denominated, open-ended fund based in GIFT City, Gujarat, that invests mainly in listed Indian equities. It is registered with IFSCA as a Restricted Scheme (Non-Retail), described as akin to a Category III AIF, and is registered with SEBI as a Category I FPI for investing in India. It began in Mauritius in June 2008 and migrated to GIFT City in April 2023 along with its investments and investors.
Who can invest in the Alchemy India Long Term Fund?
The fund is open to non-resident investors, including NRIs, OCI holders and other global investors. The fund's Indian tax exemptions under the IFSC 'specified fund' framework require that units, other than those held by a sponsor or manager, are held by non-residents, so resident Indians are not part of the eligible investor base.
What is the minimum investment in Alchemy India Long Term Fund?
The minimum investment is USD 150,000. Fees are banded by ticket size: USD 150,000 to 300,000, USD 300,000 to 500,000, and USD 500,000 and above, with lower management fees in the higher bands.
What fees does Alchemy India Long Term Fund charge?
Series A, B and C charge a management fee of 1.50%, 1.25% or 1.00% a year depending on ticket size, plus a 15% performance fee over a 6% annual hurdle, subject to a high-water mark. Series X, Y and Z charge a flat 2.50%, 2.25% or 2.00% a year with no performance fee. A subscription fee of up to 2% and exit fees for the first three years also apply.
Can I withdraw money from Alchemy India Long Term Fund at any time?
No. Subscriptions and redemptions are processed fortnightly, on the 1st and 16th of each calendar month. Exit fees are 3% for redemptions within 12 months, 2% within 13 to 24 months, 1% within 25 to 36 months, and nil after that. There is no secondary market for units.
How has Alchemy India Long Term Fund performed since inception?
As of August 31, 2026, the fund reported an annualised return of 10.9% in US dollars since June 2008, against 5.8% for the BSE 500 in US dollar terms, net of fees, expenses and taxes. The record includes calendar-year losses of 32.4% in 2008, 31.3% in 2011 and 21.5% in 2022. Past performance is not indicative of future results, and individual investor returns can differ by fee series.
Do NRIs pay Indian tax on gains from a GIFT City fund like Alchemy India Long Term Fund?
According to the fund's tax note, Indian tax on the income attributable to non-resident investors is paid at the fund level, and published returns are net of taxes. However, the note also states that if Indian tax authorities take a different position later, the trustee may recover additional tax liability from investors, even after the fund's term. Tax in the investor's country of residence applies separately.
What Indian tax rates apply inside the Alchemy India Long Term Fund?
For income attributable to non-resident investors, the fund's tax note lists 12.5% on long-term capital gains on listed equity and 20% on short-term gains where STT is paid, each plus applicable surcharge and 4% cess. Dividends are taxed at a flat 10% and most interest at 10%, or 5% for certain rupee bonds and government securities. Gains on debt securities and derivatives are exempt for the non-resident portion.
How is Alchemy India Long Term Fund taxed for US investors?
The fund has elected to be classified as a foreign partnership for US federal income tax purposes. US investors receive Schedule K-1 and, where applicable, K-3 forms after each December 31 fiscal year-end and report their proportionate share of income or loss, whether or not anything is distributed. US investors may review the implications with a US tax professional.
How is Alchemy India Long Term Fund taxed for UK investors?
The fund has held UK reporting fund status with HMRC since January 1, 2024. Under the fund's tax note, this means gains on disposal of units are generally taxed as capital gains rather than as income for UK residents. Reported income may be taxable even if not distributed, and current UK rates can be confirmed with a UK tax adviser.
Can Singapore residents invest in Alchemy India Long Term Fund?
The fund is on the Monetary Authority of Singapore's list of restricted schemes. Units may be offered to persons in Singapore only in compliance with Sections 304 and 305 of the Securities and Futures Act 2001, which limit offers to specified categories of investors.
Is a USD-denominated fund protected from rupee depreciation?
No. The fund reports its NAV in US dollars but owns Indian companies priced in rupees. If the rupee weakens against the dollar, the dollar value of those holdings falls. The fund's published USD returns already include the effect of currency movements.
What kind of stocks does Alchemy India Long Term Fund hold?
The fund follows a Growth at a Reasonable Price approach and is benchmark and market-cap agnostic. As of August 31, 2026, about 45.8% of the portfolio was in small caps, 33.3% in mid caps and 22.3% in large caps, with the top 10 holdings making up about 52% of the portfolio. Industrials, financials and consumer discretionary were the largest sectors.
What documents are needed to invest in Alchemy India Long Term Fund?
Individual investors typically need an officially valid photo ID showing name, date of birth and nationality, such as a passport; proof of residential address dated within two months; a CRS and FATCA self-certification form; and source of funds and wealth evidence if not from a FATF member country. Copies must be certified by an authorised person such as a bank official in a FATF-compliant jurisdiction or an overseas notary.
Is Alchemy India Long Term Fund the same as an Indian mutual fund?
No. It is an IFSCA-registered restricted scheme offered through a Private Placement Memorandum, not a SEBI-registered mutual fund. It has a high minimum investment, fortnightly liquidity, exit fees, performance-linked fees and a concentrated portfolio, and it is not covered by the mutual fund framework that applies to Indian mutual fund schemes.
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