Our association with Cholamandalam Group has been for decades and we value this relationship deeply. Chola securities...
K Ajith Kumar Rai, Chairman ,
Debt schemes invest majority of the corpus into fixed income instruments like Bank certificate of deposit (CD), commercial paper, RBI Treasury bills, corporate bonds / debentures, government and non-government securities.
These schemes generally invest in safer, short term instruments such as treasury bills, Bank certificate of deposit (CD), commercial paper (CP) and interbank call money. It aims to provide easy liquidity, preservation of capital and moderate & steady income. It is ideal for an investment horizon of 3 months. Corporates and individual investors use it as a means to park their surplus funds for short periods or while awaiting a more favourable investment alternative.
Similar to liquid schemes, ultra short term funds also invest in short term papers like T-Bills, CDs, CPs and also Pass through Certificates (PTCs). The average maturity of these papers is generally for a period of 3 months to 1 year. It is ideal for an investor who seeks stable returns and has an investment horizon of less than a year.
These funds invest primarily in corporate debentures, bonds issued by public sector undertakings and to some extent in CDs & CPs. It is ideal for an investor with an investment horizon of over 1 year to 18 months.
These funds hold papers like PTCs, corporate debentures and structural obligations. It is ideal for an investor with a horizon of 18 months to 3 years.
These schemes will invest in a mix of government and non-government securities. These funds hold longer maturity papers like government securities, corporate debentures etc. It is ideal for an investor with a horizon of 2 to 3 years.
Gilt funds invest only in government securities, which do not have any credit risk. Mostly these papers are also long term and require an investment horizon of 2 to 3 years.
Equity funds invest at least 65% of their portfolio in equity and equity-related securities.
Diversified equity funds invest in a diverse mix of securities that cut across sectors.
Sector funds have the mandate to invest in only one type of sector, which is already mentioned in its investment objective. For example, a banking sector fund will invest only in the shares of banking companies.
Thematic funds invest with a particular theme as their objective. For example, an infrastructure thematic fund might invest in shares of companies that are into infrastructure construction, infrastructure toll-collection, cement, steel, telecom, power etc. The investment is thus more broad-based than a sector fund; but narrower than a diversified equity fund.
ELSS schemes invest in a style similar to that of a diversified equity fund but offer tax benefit to investors under Sec 80C. However, these schemes have a lock-in period of 3 years.
Arbitrage Funds take contrary positions in different markets/securities, such that the risk is neutralized, but a return is earned. For instance, by buying a share in BSE, and simultaneously selling the same share in the NSE at a higher price. Most arbitrage funds take contrary positions between the equity market and the futures and options market.
A balanced fund invests in a mix of debt instruments and stocks. Most balanced funds available in the market keep a minimum of 65% in equity. This qualifies them as equity oriented fund and are eligible for tax benefits on long term capital gains tax.
Monthly income plans primarily invest in debt securities but have a small percentage of their funds (10%-25%) in equities also. This is to give an extra kicker to the returns generated by the schemes. These schemes come with a dividend option on monthly, quarterly, half yearly & yearly basis.