This website is purely ACADEMIC in nature and NOT a stock market recommendation service or a tip provider. No live data or feeds are provided and all information is historic only. Information is provided for ease of understanding for the purpose of learning. Accuracy of definitions etc is not mantained. I am not a SEBI or IRDA registered.

Capital Protection-Oriented Funds

Jump to:navigation, search
HomePersonal FinanceMutual FundsEquity

Welcome to this session on hybrid funds are Capital protection-oriented

Capital protection-oriented are a small variation of the balanced funds.

The difference is that there is no predefined limit in regard to allocation of equity and debt.

Capital protection-oriented funds are

=> suitable for people who have defined financial goals

=> or for those who require cash flows as the time of maturity

For example, in 3 years time, i want the funds to buy a car.

I would invest in a CPO fund that will mature near to the 3 year period

Similarly, i have to pay advance tax every quarter.

I would invest in a CPO that whose maturity date coincides with the due date of my advance tax payment. Something like 90 days, 180 days etc

So, you can observe that Capital protection-oriented funds come with a fixed maturity date.

Something similar to bank fixed deposit maturity date.

The fund manager invests both in equities and debt at the same time.

The investments will be in such a way that, at all times, the value of the investment is always more than the amount invested.

i.e they strive to ensure protection of the investment.

Remember there is no guarantee. Technically they do the balancing act to ensure capital protection.

These schemes are generally close-ended schemes.

So, once invested, you need to wait till the maturity date to get back your investment and gains.

There is no special tax efficiency because they are treated to be debt funds.

But unlike fixed maturity plans (FMP), they offer a bit of capital protection security.

These are not that popular among retail investors because of lack of liquidity.

However, they can be opted if you have a complex investment methodology and if you time various events related to financial planning.

So, this is about Capital protection-oriented funds

Hope you understood the topic.

I explained about Capital protection-oriented funds even when it is not so popular because as an investor, u shd know all the options and features available.

One scheme might not be useful to one person but the same one might appear to be very imporant for the other.

All this depends on the risk you wanted to take, the time horizon available and the nature of your financial goal.

Related Lessons

HomePersonal FinanceMutual FundsEquity