Both products serve a similar purpose – they allow investors to lock into the existing portfolio yield. If these products are held till maturity, they take away the mark-to-market risk caused by interest-rate fluctuations. However, experts suggest that investors should opt for the former, owing to their superiority on several counts.
One, FMPs are usually launched for a horizon of up to three years. TMFs are available for a wider range of tenures, going up to 10-11 years.
Two, TMFs also have portfolios with higher credit quality. They usually invest in government securities (G-Sec), state development loans (SDLs), and triple-A rated public sector unit (PSU) bonds. Thus, they are low on credit risk. FMPs, on the other hand, invest in corporate bonds, which could be of below triple-A rating as well. (However, the higher risk can translate into higher returns.)
Three, TMFs are more transparent. A TMF replicates a public index. At the time of investing, the investor knows which bonds will be included in the portfolio. In the case of an FMP, he will just know the indicative portfolio (the ratings of the bonds that the fund manager
Diese Geschichte stammt aus der September 2022-Ausgabe von Investors India.
Starten Sie Ihre 7-tägige kostenlose Testversion von Magzter GOLD, um auf Tausende kuratierte Premium-Storys sowie über 8.000 Zeitschriften und Zeitungen zuzugreifen.
Bereits Abonnent ? Anmelden
Diese Geschichte stammt aus der September 2022-Ausgabe von Investors India.
Starten Sie Ihre 7-tägige kostenlose Testversion von Magzter GOLD, um auf Tausende kuratierte Premium-Storys sowie über 8.000 Zeitschriften und Zeitungen zuzugreifen.
Bereits Abonnent? Anmelden
Why Should One Consider Investing in a Largecap Fund?
An investor’s ability to create wealth in the longterm is directly linked to how well they create an all-weather investment portfolio.
Meeting Medical Costs with Health Insurance Plans
A medical emergency can occur at any time and to any person.
Water: The Elixir of Life
If there is magic on the Planet Earth, it is contained in water - Loran Eiseley.
The 100 Crore Wealth Legacy! A Vision
Generating 100 crores from modest investments is feasible with a long-term outlook, though market timing remains elusive.
Unleashing Potential: The Dynamics of AI in India
After attending the Microsoft AI Tour recently, I attended a few conferences and met with some government officials over the past few weeks during my macro tour.
The Growing Role of Philanthropy in Wealth Management: A Shift Towards Purpose-Driven Strategies
In recent years, India’s economic landscape has seen a notable shift with the rise of High-Net-Worth Individuals (HNWIs), who are reshaping the financial ecosystem.
Are You Drinking Too Much Coffee? If Yes, Then You Are Taking A Big Risk!
Coffee contains caffeine in maximum percentage:
LIC MUTUAL FUND
According to World Bank data, women represent 49.7% of the world population. In India, women represent 48.4% of the population but they contribute only around 18% of the GDP compared to 41% in China.
Maintain 15-20% exposure to US funds in your equity portfolio
2022 was a difficult year for stocks in the United States (US), particularly for the large tech companies known as FANG. Concerns about the Russia-Ukraine conflict, inflation, etc led to a significant drop in their values.
Systematic Investment Plan (Sip): Meaning, Benefits, How It Works
We all dream of buying a car, dream house, gadgets, etc. This all can come to reality if we have strong financial planning. One of the best options is to start investing in mutual funds through a SIP (Systematic Investment Plan).