CAPITAL PROTECTION ORIENTED SCHEME

Anuj Bindlish - 2010288Vivek Parekh - 2010281

What Does it mean??

Was launched in year 2006

Wont you like to keep your hard earned money safe and also like to get better returns

on it?

A capital protection fund is a closed-ended hybrid

fund

invests 75-80% of its corpus in debt and the balance

in equities.

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

Aim to protect and grow money

Advantages

Capital is protected if the markets don't perform well

Gains if the stock prices are buoyant. These funds give better returns than fixed

income assets To attract investors who are not comfortable

with taking interest-rate risks and market volatility

It enables risk-averse investors to gain exposure to equities

Certified by a rating agency

Why no to it ?

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

not even comparable to those of liquid funds and bank fixed

deposits

offer capital protection, without a guarantee

the fund does not buy back before the maturity of the term

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

don't provide an interim income

Insipid returns in the past three years

SEBI Regulation

Debt investment must be in highest rated investment grade

papers e.g. high-yielding commercial papers and non-convertible

debentures

“Capital protection oriented schemes

38A. A capital protection oriented scheme may be launched,

subject to the following: F.No. SEBI/LAD/DOP/ 0308 /2006

(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;

(b) the scheme is close ended; and

(c) there is compliance with such other requirements as may be

specified by the Board in this behalf.”

Thank You