Alchemy GIFT City Fund Review: Strategy, Fees & Who It Suits

The Alchemy GIFT City fund is a long-only Indian equity scheme priced in US dollars. Its legal name is Alchemy India Long Term Fund, a scheme of Alchemy Alternative Investment Trust. It has been running since June 2008, and the numbers are worth pausing on. As of 31 August 2026, Alchemy reports a 10.9% yearly return since start against 5.8% for the USD-adjusted BSE 500. That is about 5.1 percentage points of extra return each year, net of fees, costs, and taxes.

The live question is not whether India equity is interesting. It is whether you want a focused, small- and mid-cap-tilted listed-India portfolio, priced in dollars, with a USD 150,000 ticket and a three-year declining exit fee, instead of an onshore PMS, an onshore AIF, or a simpler GIFT City feeder.

This page breaks down the investment thesis, how the extra return is supposed to show up, what sits in the portfolio today, what it has returned, what it costs, and who it is built for. Figures are as of 31 August 2026 unless noted.

The private placement memorandum (PPM) and the contribution agreement still govern. What follows is drawn from Alchemy’s September 2026 investor presentation and four-page note, not from those legal documents.

Our view

You are not buying an India index, and you are not buying a GIFT City tax product. You are buying a long-only, growth-at-a-reasonable-price list of listed Indian companies, run in US dollars from GIFT City, with room for the odd PIPE or IPO.

Any extra return has to come from owning fewer names than the BSE 500, holding them for years, and accepting that the portfolio will look nothing like the index. Hiren Ved’s process has an 18-year USD series behind it. As of 31 August 2026 that series is 10.9% a year versus 5.8% for the USD-adjusted BSE 500.

The other side of the same bet is also on the page. About 79% of the live portfolio is mid and small cap. Calendar 2025 was -8.1% versus +1.3% for the index. Calendar 2022 was -21.5% versus -7.3%. Those 10.9% and 5.8% figures are manager-reported. They are not verified by IFSCA or SEBI. A separate managed-account mandate that ended in October 2024 is not this fund. The current PPM was not in the pack used for this review.

Snapshot

As of 31 August 2026.

The fund started in Mauritius, moved to GIFT City in April 2023, and is now run from there. Alchemy Capital Management Pvt. Ltd. (Mumbai), Alchemy Investment Management Pte Ltd (Singapore), and Alchemy Investment Management LLP (GIFT City) together managed and advised about USD 1.3 billion as of the same date. That is group AUM, not this scheme’s NAV.

How the Alchemy GIFT City fund invests

What you are actually betting on

Alchemy’s stated job is long-term absolute return on your capital, not beating an index by a little every quarter. The core bet has two parts.

First, India is treated as a high-growth economy. The way to capture that, in this process, is to own listed companies that can use domestic and global demand without paying any price for the growth. Alchemy calls this Growth at a Reasonable Price.

Second, the team does not try to trade around short-term swings. Holding periods are generally two years or more. A name leaves when the thesis breaks, the weight gets too large, or a better risk-reward idea shows up. There is no fixed target price.

If you subscribe, you are underwriting that combination: a smaller list of businesses, held for years, chosen for growth quality and price, not for how much they weigh in the BSE 500.

How the extra return is supposed to show up

The extra return is not a GIFT City effect. It is a stock-picking effect, if it arrives at all.

Because the fund does not manage to an index, it can look nothing like the BSE 500 when the team has confidence elsewhere. In practice that means 20–40 names, new positions starting at up to 5%, a 15% stock cap, and a 40% sector cap. The live portfolio is also market-cap agnostic. As of 31 August 2026, small and mid caps were 79.1% of the portfolio. That is where Alchemy has often found growth at a price. It is also why the ride is bumpier than a large-cap India product.

The calendar-year table later in this page is the evidence, not a slogan. In sharp, narrow rallies led by cyclicals or momentum (2009, 2020), the fund lagged. In broader markets where stock-picking showed up (2021, 2014, 2012), it pulled ahead. 2022 and 2025 cut the other way. That pattern is the thesis working and then hurting, not two different strategies.

PIPEs and IPOs are allowed when the team likes them. The four-pager also says there is no shorting, no extra borrowing beyond listed derivatives, and no direct stake in operating companies. Read the PPM if derivatives matter to your underwriting.

What has to go right

For this line to earn its keep over a five-to-seven-year hold, a few things have to stay true at the same time.

The companies in the portfolio have to keep compounding earnings in large, expanding markets, with a real edge and returns on capital that justify the entry price. Management has to stay ambitious and still respect capital discipline. Alchemy is explicit that it will not back aggression without accountability.

The process has to keep selling names when the thesis breaks, not only when a sale looks good in a case study. Liquidity has to be good enough to exit. The risk team caps a position at 25% of six-month average daily volume for that reason.

You also have to stay invested through the ugly years. A two-year net figure of -0.7% as of 31 August 2026, and an exit fee of 3% in year one, will wreck the result if you treat this as money you might need soon.

What would prove the thesis wrong

The thesis is wrong for you if you needed the BSE 500. This portfolio is built to look different, including in down years.

It is also under pressure if Indian small and mid caps lag large caps for a long stretch, or if the market rewards only a narrow set of momentum and cyclical names. That is what 2025, 2020, and 2009 looked like from inside this process.

A third break is simple: paying too much for growth, or letting a winner become too large without a trim. The 15% and 40% caps bound the damage. They do not remove it. Ten names were already about 52% of the portfolio as of 31 August 2026.

Currency can cut it too. Units are in dollars, but the businesses earn in India. A weaker rupee still shows up in NAV.

GIFT City as a base does not rescue a weak stock list, and it does not settle your personal tax. The manager and the person who buys units can sit in very different tax positions.

Portfolio rules

In practice the construction rules are:

• A focused portfolio of around 20–40 holdings
• New positions start small, up to 5%, and get scaled as confidence builds
• No single stock above 15%, no sector above 40%
• Holding periods that typically run two years or longer. That is a guideline, not a rule
• No shorting. No extra borrowing beyond listed derivatives. No direct stake in operating companies, per the four-pager
• Room for selective PIPE deals and IPOs

Company basics come first. Macro calls and index weights come a distant second. Ideas go through primary research, management meetings, and financial analysis, with a numbers screen across about 350 tracked stocks in the background.

Growth businesses sit at the core. After a sharp market drop, the team may also step into deep value, special situations, and IPOs or PIPEs it likes.

Who runs the strategy

One thing that stands out is how little the leadership has turned over. Hiren Ved is Director and CIO of Alchemy Capital Management, with more than 30 years in Indian equities. The group’s parent, founded in 1999, still gives non-binding advisory input to Alchemy Investment Management LLP, which actually runs the GIFT City fund.

Alchemy Capital Management also holds a SEBI portfolio-manager registration (INP000000365) for its domestic PMS business. That is a separate product from this GIFT City scheme. Even so, people mix the two up. They are not the same. Likewise, Alchemy’s onshore Long Term Ventures fund is another different job: listed plus pre-IPO, with a different lock-up.

Alchemy can onboard investors directly.

Research process

New ideas come from theme and macro reads, the 350-stock numbers screen, company visits, management meetings, channel checks, sector conferences, and a wider network of investors and analysts. Once an analyst has something worth pursuing, it gets pitched to the full investment team. Then the group debates basics, price, and risk before the name enters the investment universe.

Getting into the universe is only step one. A name still has to clear the bar on price, growth quality, and management before it enters the actual portfolio. After that, the covering analyst keeps tracking it, portfolio managers check positions daily, and the CIO reviews the portfolio more deeply every quarter.

Daily and monthly risk checks

Risk work is daily, not a quarterly checkbox. The team tracks growth, return on equity, cash conversion, debt, and management change, plus price action and the hard limits: 15% per stock, 40% per sector. Once a month that zooms out into what is driving returns, how peers compare, and how easy it is to sell. The liquidity test uses six months of average daily volume and caps a position at 25% of that, so a holding can be sold without the fund itself moving the price.

Alchemy GIFT LLP’s risk team also checks mandate and rule adherence every day. If something breaches a limit, the portfolio manager has 5 to 7 business days to fix it. In addition, the Alchemy India Investment Committee reviews the process from time to time as a further check.

That is a real process. However, it is still a process described in a marketing deck. Ask for a recent exit that was about thesis failure, not a winning sale.

Fund performance (as of 31 August 2026)

Put USD 100 into the fund in June 2008 and by 31 August 2026 it would be worth about USD 658. The same USD 100 tracking the USD-adjusted BSE 500 would be sitting at about USD 281. In other words, that gap is what 5.1% extra return each year looks like in dollars.

Periodic returns

Returns under a year are absolute. Anything longer is a compound yearly figure using time-weighted return. Figures are net of fees, costs, and taxes where they apply. Therefore, what an individual investor actually earns will vary by series. Past performance is not a preview of what comes next.

Calendar year returns

Reading down that table, a pattern shows up. In sharp, narrow rallies led by deep cyclicals or momentum names (2009, 2020), the fund lagged. On the other hand, in broader markets where stock-picking showed up (2021, 2014, 2012), it pulled well ahead. That is the nature of a focused portfolio that is not tied to an index. It is not going to move in a straight line versus the index, in either direction. Similarly, 2022 and 2025 are the recent reminders that the lag years are part of the same record as the 10.9% yearly figure since start.

Portfolio composition (as of 31 August 2026)

Sector and market cap mix

The negative cash figure reflects tax set-asides. Alchemy footnotes actual cash at about 5.6% of portfolio value.

Small- and mid-cap names make up 79.1% combined. That mix is how the thesis is expressed today: more growth-at-a-price names, less of the large-cap index. It is also why the fund can swing harder than a large-cap-heavy benchmark in rough patches. Avalon, Paytm, CarTrade, MCX, Ather, and the other top weights are the live expression of that bet. They are not a recommended stock list, and they will change.

Top holdings

Those ten names are about 52% of the portfolio. So more than half the capital sits in the team’s highest-confidence ideas, still inside the 15% single-stock ceiling. Names and weights change.

Long-term holding examples

Alchemy has also shared four past positions, with figures as of 30 June 2026. Read them as a window into holding periods and into the kind of compounding the thesis is aiming for, not as a promise that the next pick works the same way. In fact, the deck itself says readers should not assume the securities discussed were or will be profitable. A 13-year digital lender and a 14-year private-label retailer show the “hold for years” part. A 57% USD yearly figure over four years shows what happens when a thesis works. Neither is the average outcome of the 20–40 stock portfolio.

Fees and liquidity

There are six series, split by ticket size and by whether you pay a performance fee.

Share classes

The short version: A, B, and C charge less on the management fee and take 15% of returns above a 6% hurdle, subject to a high-water mark in the deck notes. In contrast, X, Y, and Z skip the performance fee and charge more on the management side. Which one makes sense depends on the return you are willing to live with, not on which label looks cheaper.

USD 150,000 gets you into Series A or X. After that, larger commitments unlock lower management fees.

Dealing, exit fees and providers

Exit fee: 3% in months 0–12, 2% in months 13–24, 1% in months 25–36, then nil. Subscription fee: up to 2%. Subscriptions and redemptions are fortnightly, on the 1st and 16th. That is an exit load, not a hard lock-in. You can still lose 3% of value if you need the money in year one. Besides, the PDFs do not state a notice period.

The manager is also registered with the US SEC as an investment adviser.

Tax and eligibility

How this gets taxed depends on where the investor is based. None of the points below is a filing conclusion.

Tax by country

US investors are told they receive K-1 / K-3 statements, because the fund has chosen to be treated as a foreign partnership for US federal tax, with a 31 December year-end. That is not a PFIC conclusion. Take US counsel before you subscribe.

UK investors are told the fund has had HMRC reporting-fund status from 1 January 2024. Singapore offers sit on the MAS restricted-schemes list under the Securities and Futures Act. Confirm both on the current lists, not on this page.

GIFT City IFSC units are treated as non-resident under Indian currency rules. That is not the same as a personal tax holiday. For the usual mix-ups, see GIFT City tax myths.

Who can invest

The four-pager opens the fund to global investors, including NRIs and OCI holders, plus FPIs and other accredited or eligible investors in the US, UK, and Singapore, subject to local rules. Exact who-can-invest rules sit in the PPM. Resident / LRS access is not stated in these two PDFs.

Who it may suit

The Alchemy GIFT City fund may suit an eligible NRI, OCI holder, or other global investor who can place at least USD 150,000, is investing for five to seven years, and wants the extra return (if any) to come from a focused listed-India portfolio rather than from hugging the BSE 500.

It may also suit someone who already holds a more spread-out India core, wants USD dealing from GIFT City, and can sit through double-digit down years without selling. In that case, a USD 500,000+ line (Series C or Z) is easier to hold as a smaller part of the India allocation than as the whole of it.

Who should wait

The first reason to pause is simple: you may need the money inside three years. Fortnightly dealing is not same-week cash, and the exit fee is real.

If you want the index, this is also a poor fit. This portfolio is built to look different from the BSE 500, including in down years.

A 45.8% small-cap weight, as of 31 August 2026, is another pause point if that is more risk than you mean to take in one line, or if you already have a lot of small- and mid-cap India risk elsewhere.

US persons should wait until tax counsel has reviewed K-1 / K-3 reporting. In the same way, anyone who wanted Alchemy’s onshore Long Term Ventures mix of listed and pre-IPO names should treat this as a different product with a different lock-up.

Finally, resident investors should wait until the PPM states, in writing, that they are eligible.

Frequently asked questions

Common mistakes

One common mistake is treating “not tied to an index” as lower risk. The fund has posted calendar-year losses larger than the BSE 500. For instance, 2022’s -21.5% versus -7.3% is the clean example. Not tracking the index cuts both ways.

Another is ignoring the small- and mid-cap tilt. With 79.1% of the portfolio in those names as of August 2026, stacking this next to other small- and mid-cap-heavy holdings can leave you more focused in that segment than you meant to be.

A third is picking a series on management fee alone. Series A/B/C look cheaper upfront. Even so, the 15% over 6% performance fee can still cost more than X/Y/Z’s flat fee in a strong year. Model both.

Redeeming inside the exit-fee window is a further one. Leave in the first 12 months and you pay 3%, then 2%, then 1%. Size the entry with that in mind if there is any chance of needing the money back soon.

Some investors also assume a USD price tag removes currency risk. It changes how the rupee shows up. Yet it does not remove India risk.

Reading the four case studies as a return guarantee is another trap. Strong yearly figures on selected holdings are not the portfolio’s average outcome.

Finally, skipping the PPM because the presentation already has a fee table is a mistake. The presentation says it is not the complete terms.

Bottom line

The Alchemy GIFT City fund is a USD, focused, growth-at-a-reasonable-price listed-India scheme for eligible global investors who can live with mid- and small-cap risk and a three-year exit-fee schedule. Eighteen years in, the manager-reported 10.9% yearly return and 5.1 percentage points of extra return versus the USD BSE 500 are real numbers. So are 2022, 2025, and a live portfolio that is about 79% mid and small cap.

If that job matches the capital, the next document is the current PPM, not another marketing page. Confirm fees, who can invest, derivatives, and tax with the offer documents and with your own advisers.

This article is for general information. It is not investment, tax, or legal advice, and it is not an offer to invest in any PMS, AIF, mutual fund, or GIFT City product.

Kalviro Ventures LLP acts as a distributor and does not manage the underlying investments. Past performance is not a guide to future results. Current offer documents govern the terms, fees, who can invest, and product-specific risks. Review those documents and get advice that fits your situation before investing.