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Capital Protection Oriented Scheme


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Capital Protection Oriented Scheme

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Capital Protection Oriented Scheme

  1. 1. Capital Protection Oriented Scheme<br />Anuj Bindlish - 2010288<br />Vivek Parekh - 2010281<br />
  2. 2. What Does it mean??<br />Was launched in year 2006<br />
  3. 3. Wont you like to keep your hard earned money safe and also like to get better returns on it?<br />A capital protection fund is a closed-ended hybrid fund <br />invests 75-80% of its corpus in debt and the balance in equities.<br /> Over the term of the plan, the debt portion grows to the principal amount, thus ensuring that the capital is 'protected'. Meanwhile, the portion invested in stocks helps boost returns<br />
  4. 4. Aim to protect and grow money<br />
  5. 5. Advantages<br />Capital is protected if the markets don't perform well <br />Gains if the stock prices are buoyant.<br />These funds give better returns than fixed income assets<br />To attract investors who are not comfortable with taking interest-rate risks and market volatility <br />It enables risk-averse investors to gain exposure to equities<br />Certified by a rating agency <br />
  6. 6. Why no to it ?<br />These low returns during very high levels of inflation. Which in the past three years has been 7.3%, meaning that a fund earning 6-7% returns was not growing your wealth but eroding its value<br />not even comparable to those of liquid funds and bank fixed deposits<br />offer capital protection, without a guarantee<br />the fund does not buy back before the maturity of the term<br />these funds are illiquid because If u want to exit you will have to sell the units on the stock exchange. But there are hardly any buyers or sellers<br />don't provide an interim income<br />
  7. 7. Insipid returns in the past three years<br />
  8. 8.
  9. 9. SEBI Regulation<br />Debt investment must be in highest rated investment grade papers e.g. high-yielding commercial papers and non-convertible debentures<br />“Capital protection oriented schemes<br />38A. A capital protection oriented scheme may be launched, subject to the following: F.No. SEBI/LAD/DOP/ 0308 /2006<br />(a) the units of the scheme are rated by a registered credit rating agency from the viewpoint of the ability of its portfolio structure to attain protection of the capital invested therein;<br />(b) the scheme is close ended; and<br />(c) there is compliance with such other requirements as may be specified by the Board in this behalf.”<br />
  10. 10. Thank You<br />