Structured products are generally close ended hybrid instruments which could be either
with principal protection or without principal protection.
Examples are:
• MLDs
• NCDs
• PMSs
MLD's
Market Linked Debentures (MLDs) generally provide capital Protection
Potential to earn higher returns than those offered by fixed deposits or other debt instruments.
Risk Return Dynamics –Return enhancement through growth assets with calculated level of risk.
Hybrid Exposure – Exposure to varied asset class for obtaining stable returns.
Customized view – Capitalize on specific market views / theme (eg. Bullish on single stock / sector, near term bearish, etc.)
NCD's
NCDs are Non-convertible Debentures are similar fixed deposits invested in a Corporate. Companies generally raise funds using this approach. NCDs can be secured or unsecured.
Secured NCDs are backed up by the assets or other collateral of the company.
Unsecured NCDs are not backed up by any assets or collateral.
PMS (Portfolio Management Services)
Benefits of investing in PMS: Portfolio Management Services (PMS) has various benefits.
The basic knowledge of investment is essential when it comes to stocks. The major share of the market is held by companies that appear lucrative but tend to become long-term investments with low returns. A quality portfolio helps investors by selecting quality companies for investment and lets the investor “Buy and Hold”.
The investments made through PMS are not dependent on the behavior of other investors. PMS has isolated individual holdings so one investor’s behavior does not impact other investors’ investments. The best part about investing in PMS is that the stocks are bought in the investor’s name making him/her the owner which is not the case in other investments such as mutual funds.
One can always add more funds to one’s investments and that too online. For example, if there is a portfolio of 1 Crore, another 50 Lakhs can be added to it using the online services.
Investing in a Portfolio Management Service has higher chances of superior returns as the funds are structurally invested into opportunities with a high yield capacity. Also, the Portfolio Manager makes sure that transparency is maintained between the investor and the investments. No investments or sell outs are carried out without informing the investor about the same.
Unlike Mutual Funds, charges are transparent in PMS. The deductions and other charges are clearly mentioned in the statements provided to the investor.
It is money pooled together, especially by High-net-worth individuals to invest. An AIF can be established in the form of a company, a body corporate, a trust, or an LLP.
There are three categories of AIF in India.
This category includes funds which invest in Startups, Small and Medium Enterprises (SMEs).
Funds which invest mainly in equity and debt securities come under this category.
Funds with the objective of short-term returns come under this category. They follow various complex and diverse trading strategies to generate returns.
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