The term 'capital protection oriented scheme' means a mutual fund scheme which is designated as such and which endeavors to protect the capital invested therein through suitable orientation of its portfolio structure. The angle concerning the protection of capital creates from the portfolio structure of the scheme and not from any bank security, insurance cover etc.
SEBI stipulations require these types of schemes to be close-ended in nature, listed on the stock exchange and the intended portfolio structure would have to be mandatory rated by a credit rating agency. A characteristic portfolio construction could be to set apart the major portion of the assets for capital safety and could be invested in highly rated debt instruments.
The remaining portion would be invested in equity or equity-related instruments to provide capital appreciation. Capital Protection Oriented structures are a present member in the Indian capital markets and must not be confused with 'capital guaranteed' schemes.
This is the closed-ended debt mutual funds that aim to capitalize a substantial amount of money in top-rated fixed income instruments and the rest in equities.
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