Baroda BNP Paribas Asset Management India Private Limited has launched India’s first fund—through its GIFT City branch—that allows Indian investors to directly invest in the US small-cap market.
The fund is called Baroda BNP Paribas GIFT US Small Cap Fund.
This GIFT City–based scheme is the first of its kind to focus on US small-cap companies. It offers Indians a convenient and regulated way to participate in the US stock market.
The fund is dollar-denominated and can be invested in through the RBI’s Liberalized Remittance Scheme under the Overseas Portfolio Investment Route.
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Why US Small Caps Are Considered Attractive
Sanjay Grover, MD & CEO of Baroda BNP Paribas AMC, said that as a GIFT City–registered Restricted Scheme, this fund is a strong option for investors seeking diversification into the US small-cap segment.
According to him, US small caps may become an attractive asset class in 2025 due to several potential positive factors.
Earlier, Indian investors had limited choices in global markets because many international mutual funds had reached SEBI’s $7 billion investment limit.
Since this new fund is regulated by IFSCA as a Restricted Scheme, it bypasses that limitation and reopens access to global investments for regular investors, family offices, HNIs, and UHNIs.
Fund Performance and Ratings
The Baroda BNP Paribas GIFT US Small Cap Fund will invest in the BNP Paribas US Small Cap Fund, which holds a 3-star Morningstar rating.
This base fund has outperformed the Russell 2000 Index in 10 out of the last 12 years (as of September 30, 2025).
With a corpus of $1.4 billion, it has delivered a 14.27% USD CAGR over the past three years.
The fund is managed by an experienced US investment team led by Geoff Daly.
Reasons This Fund May Benefit Investors
According to lead portfolio manager Geoff Daly, US stock markets remain strong despite global volatility. He believes this is a good time to look beyond the recent surge in mega-cap tech stocks.
US small-cap stocks currently offer strong potential because:
They may benefit from potential Federal Reserve policy changes
Their valuations are lower than large caps
Their businesses depend more on the domestic US economy
However, he also noted that geopolitical risks continue to exist.
A Good Option for Diversification
Small-cap stocks give investors exposure to a wider part of the US economy, unlike the tech-heavy S&P 500.
This makes them a useful choice for diversification, allowing investors to tap into a less-explored but important segment of the American growth story.