Investment Option Through Bajaj .docx

1.1 Introduction to Financial Investment Product Financial products refer to instruments that help you save, invest, get insurance or get a mortgage. These are issued by various banks, financial institutions, stock brokerages, insurance providers, credit card agencies and government sponsored entities. Financial products are categorised in terms of their type or underlying asset class, volatility, risk and return. Securities and investments created to provide buyers and sellers with short term or long-term financial gains are known as financial products. These allow liquidity to circulate in an economy and risk to be spread. Many of the financial products are in the form of contracts that you can negotiate on financial markets. The contracts stipulate cash movement at present and in future, depending on conditions stated. Financial products can help us grow the amount of money we have to meet various financial goals, such as retirement, children’s education, marriage and so on. Before you invest in any financial product, you should learn about any potential risks, limitations, costs as well as other characteristics of the products.

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1.2 Types of Financial Products in Which Bajaj Capital Deals There are number of financial products and services in India has increased multi fold. It requires a lot of patience and skill to pick up the best suited option from this huge list of financial products available with us. Here are some of them:

Mutual Funds Mutual Funds are among the hottest favourites with all types of investors. Investing in mutual funds ranks among one of the preferred ways of creating wealth over the long term. In fact, mutual funds represent the hands-off approach to entering the equity market. There are a wide variety of mutual funds that are viable investment avenues to meet a wide variety of financial goals. This section explains the various aspects of Mutual Funds. MUTUAL FUND INVESTMENTS ARE SUBJECT TO MARKET RISKS. READ ALL SCHEME RELATED DOCUMENTS CAREFULLY

Bonds A bond is a fixed income investment in which an investor loans money to an entity (typically corporate or governmental) which borrows the funds for a defined period of time at a variable or fixed interest rate. Bonds are used by companies, municipalities, states and sovereign governments to raise money and finance a variety of projects and activities. Owners of bonds are debtholders, or creditors, of the issuer.

Company Fixed Deposit Deposit(s) in companies that earn a “fixed rate of return” over a period of time are called company fixed deposit. Manufacturing Companies, Financial Institutions and Non-Banking Finance Companies (NBFCs) accept such deposit.

IPOs An initial public offering is when a private company or corporation raises investment capital by offering its stock to the public for the first time. Growing companies seeking capital to expand are those that generally use initial public offerings, but large, privately owned companies or corporations looking to become publicly traded can also do them. In an initial public offering, the issuer, or company raising capital, brings in an underwriting firm or investment bank, to help determine the best type of security to issue, offering price, number of shares and timeframe for the market offering. 2

Mutual Fund Meaning A mutual fund is formed when capital collected from different investors is invested in company shares, stocks or bonds. Shared by thousands of investors (including you), a mutual fund is managed collectively to earn the highest possible returns. The person driving this investment vehicle is a professional fund manager.

History of Mutual Funds: Prof K Geert Rouwenhorst in 'The Origins of Mutual Funds', states that the origin of pooled investing concept dates back to the late 1700s in Europe, when "a Dutch merchant and broker invited subscriptions from investors to form a trust to provide an opportunity to diversify for small investors with limited means." The emergence of "investment pooling" in England in the 1800s brought the concept closer to the US shores. The enactment of two British laws, the Joint Stock Companies Acts of 1862 and 1867, permitted investors to share in the profits of an investment enterprise and limited investor liability to the amount of investment capital devoted to the enterprise. Shortly thereafter, in 1868, the Foreign and Colonial Government Trust was formed in London. It resembled the US fund model in basic structure, providing "the investor of moderate means the same advantages as the large capitalists by spreading the investment over a number of different stocks." More importantly, the British fund model established a direct link with the US securities markets, helping finance the development of the post-Civil War US economy. The Scottish American Investment Trust, formed in February 1873, by fund pioneer Robert Fleming, invested in the economic potential of the US, chiefly through American railroad bonds. Many other trusts followed them, who not only targeted investment in America, but led to the introduction of the fund investing concept on the US shores in the late 1800s and the early 1900s. The first mutual or 'open-ended' fund was introduced in Boston in March 1924. The Massachusetts Investors Trust, which was formed as a common law trust, introduced important innovations to the investment company concept by establishing a simplified capital structure, continuous offering of shares, and the ability to redeem shares rather than holding them until dissolution of the fund and a set of clear investment restrictions as well as policies. The stock market crash of 1929 and the Great Depression that followed greatly hampered the growth of pooled investments until a succession of landmark securities laws, beginning with the Securities Act, 1933 and concluded with the Investment Company Act, 1940, reinvigorated investor confidence. Renewed investor confidence and many innovations led to relatively steady growth in industry assets and number of accounts. 3

The Mutual Fund Industry in India: The mutual fund industry in India started in 1963 with the formation of Unit Trust of India (UTI) at the initiative of the Reserve Bank of India (RBI) and the Government of India. The objective then was to attract small investors and introduce them to market investments. Since then, the history of mutual funds in India can be broadly divided into six distinct phases. Phase I (1964-87): Growth Of UTI: In 1963, UTI was established by an Act of Parliament. As it was the only entity offering mutual funds in India, it had a monopoly. Operationally, UTI was set up by the Reserve Bank of India (RBI), but was later delinked from the RBI. The first scheme, and for long one of the largest launched by UTI, was Unit Scheme 1964. Later in the 1970s and 80s, UTI started innovating and offering different schemes to suit the needs of different classes of investors. Unit Linked Insurance Plan (ULIP) was launched in 1971. The first Indian offshore fund, India Fund was launched in August 1986. In absolute terms, the investible funds corpus of UTI was about Rs 600 crores in 1984. By 1987-88, the assets under management (AUM) of UTI had grown 10 times to Rs 6,700 crores. Phase II (1987-93): Entry of Public Sector Funds: The year 1987 marked the entry of other public sector mutual funds. With the opening up of the economy, many public sector banks and institutions were allowed to establish mutual funds. The State Bank of India established the first non-UTI Mutual Fund, SBI Mutual Fund in November 1987. This was followed by Can bank Mutual Fund, LIC Mutual Fund, Indian Bank Mutual Fund, Bank of India Mutual Fund, GIC Mutual Fund and PNB Mutual Fund. From 1987-88 to 1992-93, the AUM increased from Rs 6,700 crores to Rs 47,004 crores, nearly seven times. During this period, investors showed a marked interest in mutual funds, allocating a larger part of their savings to investments in the funds.

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Phase III (1993-96): Emergence of Private Funds: A new era in the mutual fund industry began in 1993 with the permission granted for the entry of private sector funds. This gave the Indian investors a broader choice of 'fund families' and increasing competition to the existing public sector funds. Quite significantly foreign fund management companies were also allowed to operate mutual funds, most of them coming into India through their joint ventures with Indian promoters. The private funds have brought in with them latest product innovations, investment management techniques and investor-servicing technologies. During the year 1993-94, five private sector fund houses launched their schemes followed by six others in 1994-95. Phase IV (1996-99): Growth and SEBI Regulation: Since 1996, the mutual fund industry scaled newer heights in terms of mobilization of funds and number of players. Deregulation and liberalization of the Indian economy had introduced competition and provided impetus to the growth of the industry. A comprehensive set of regulations for all mutual funds operating in India was introduced with SEBI (Mutual Fund) Regulations, 1996. These regulations set uniform standards for all funds. Erstwhile UTI voluntarily adopted SEBI guidelines for its new schemes. Similarly, the budget of the Union government in 1999 took a big step in exempting all mutual fund dividends from income tax in the hands of the investors. During this phase, both SEBI and Association of Mutual Funds of India (AMFI) launched Investor Awareness Programme aimed at educating the investors about investing through MFs. Phase V (1999-2004): Emergence of a Large and Uniform Industry: The year 1999 marked the beginning of a new phase in the history of the mutual fund industry in India, a phase of significant growth in terms of both amounts mobilized from investors and assets under management. In February 2003, the UTI Act was repealed. UTI no longer has a special legal status as a trust established by an act of Parliament. Instead it has adopted the same structure as any other fund in India - a trust and an AMC. UTI Mutual Fund is the present name of the erstwhile Unit Trust of India (UTI). While UTI functioned under a separate law of the Indian Parliament earlier, UTI Mutual Fund is now under the SEBI's (Mutual Funds) Regulations, 1996 like all other mutual funds in India. The emergence of a uniform industry with the same structure, operations and regulations make it easier for distributors and investors to deal with any fund house. Between 1999 and 2005 the size of the industry has doubled in terms of AUM which have gone from above Rs 68,000 crores to over Rs 1,50,000 crores. 5

Phase VI (From 2004 Onwards): Consolidation and Growth: The industry has lately witnessed a spate of mergers and acquisitions, most recent ones being the acquisition of schemes of Allianz Mutual Fund by Birla Sun Life, PNB Mutual Fund by Principal, among others. At the same time, more international players continue to enter India including Fidelity, one of the largest funds in the world.

Advantages of Mutual Fund Simplicity: Most investors do not have the knowledge, time or resources to build their own portfolio of stocks and bonds. Stock investors often have extensive knowledge of fundamental analysis or technical analysis. However, buying shares of a mutual fund enables an investor to own a professionally managed, diverse portfolio, although the investor may have little or no knowledge of investing concepts and strategies. Mutual funds are professionally managed, which means the investor does not need knowledge of investing in capital markets to be successful with them. Diversity: All investors, beginners and pros alike, know that putting all of their eggs into one basket is not wise. This speaks to the wisdom of diversification with mutual funds. To diversify with stocks, an investor may need to buy 20 or more securities to reach sufficient diversification. However, many mutual funds offer complete diversification in just one security that can be easily purchased. Therefore, a mutual fund investor can break the eggs-in-one-basket rule with mutual funds, at least when getting started, and then add more mutual funds later to increase diversity in the mutual funds portfolio. For more on this idea, be sure to read our article on how to get started investing with just one mutual fund. Versatility: There are so many types of mutual funds that investors can gain access to almost any segment of the market imaginable. For example, sector funds make it possible for investors to buy into focused areas of the market, such as healthcare, technology, financials, and even social media. Beyond sector funds, investors can also access other asset types, such as gold, oil and other natural resources. This versatility can be used for further diversification as an investor's portfolio grows. Professional money managers often use sector funds for this purpose in building client portfolios.

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SIP option If you do not wish to make a one-time investment, you can invest in smaller and manageable instalments called SIP. Systematic Investment Plans foster financial discipline in investors. As it averages the rupee cost, SIP is an ideal alternative to mid-income and low-income investors. Accessibility: With as little as $100 an investor can get started investing with mutual funds. And the fact that mutual funds hold dozens, hundreds, or even thousands of other securities, an investor can gain access to an entire market of investable securities. For example, an investor buying shares in one of the total stock market index funds, gains exposure to over 3,000 stocks in just one fund. This returns to the simplicity and diversification of mutual funds. Although investing concepts and strategies are rarely taught in schools, the beginning investor can find easy tips about how to buy mutual funds online or in bookstores and get started investing within minutes or just a few hours. Expert Money Management Individual investors may not have the time or professional expertise to decide which fund to invest in or how to. A mutual fund company employs professional managers to manage the money pooled in their funds. They decide which company share, sectors/stocks or debt papers to invest the money or whether to hold on to the capital. Their decisions will be in the investors’ interest. Low Cost Mutual funds are an affordable investment option for people who do not have wish to make a large initial investment. Fund houses charge a nominal fee, called expense ratio, that ranges from 0.5% to 1.5%, and cannot exceed 2.5% as per SEBI regulations. They deduct the expense ratio from the money you invest. Investors bear the transactional expenses proportionately. Flexibility to switch funds A serious investor (or fund manager) knows when to switch from the current fund to another to keep up with or stay ahead of the market. There are many mutual fund schemes that allow this. The asset manager has to keep a sharp eye on the market to know this. This ensures better returns while not getting burned by market volatility.

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Investments based on goals & focus sector Every investor has a financial goal. It could be a short-term goal such as an international holiday or a long-term goal like fixed income post retirement. Also, different schemes focus on different assets and outcomes with varying risk factors. This allows investors to drive money to various asset classes as per their risk appetites and goals. Flexibility in terms of tenure Most mutual funds don’t have time constraints unless specified otherwise. ELSS, tax saving fund is the only mutual fund that comes with a minimum lock-in period of 3 years. This gives investors ample flexibility in terms of their financial goals, whether short-term or long-term. Investing for a certain term also makes it easier to plan when and how to invest and investment horizon. Liquidity Mutual funds are completely liquid investments. You can redeem your invested money any time you want. There is no need to justify your decision or hunt for a buyer. Simply place a request with your fund house, and get the money credited to your account in 2-3 working days. Painless trading & transaction Buying, selling and redeeming a fund at the current market price per unit (NAV) is quite simple. All you need to do is put in a request with the fund company and the fund manager will take care of the rest. With its easy liquidity, mutual funds can serve as your emergency funds. Tax-Efficiency Mutual fund (ELSS) has historically generated superior returns compared to the more traditional 80-C options like FD, PF etc. Budget 2018 re-introduced tax on long-term capital gains exceeding Rs. 1 lakh. This amendment on LTCG only applies to equity and equity-oriented schemes. However, due to the higher returns, capital gains on ELSS will still be more. Safe & secure in every sense All mutual fund companies are under the purview of the government body, SEBI (Securities Exchange Board of India) and AMFI (Association of Mutual Funds in India). It is as safe as putting money in a bank.

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Disadvantages of Mutual Funds Fluctuating Returns: Like many other investments without a guaranteed return, there is always the possibility that the value of your mutual fund will depreciate. Equity mutual funds experience price fluctuations, along with the stocks that make up the fund. The Federal Deposit Insurance Corporation (FDIC) does not back up mutual fund investments, and there is no guarantee of performance with any fund. Of course, almost every investment carries risk. But it's especially important for investors in money market funds to know that, unlike their bank counterparts, these will not be insured by the FDIC. Cash: As you know already, mutual funds pool money from thousands of investors, so every day people are putting money into the fund as well as withdrawing it. To maintain the capacity to accommodate withdrawals, funds typically have to keep a large portion of their portfolios in cash. Having ample cash is great for liquidity, but money sitting around as cash is not working for you and thus is not very advantageous. Evaluating Funds: Researching and comparing funds can be difficult. Unlike stocks, mutual funds do not offer investors the opportunity to compare the P/E ratio, sales growth, earnings per share, etc. A mutual fund's net asset value gives investors the total value of the fund's portfolio, less liabilities, but how do you know if one fund is better than another?

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STRUCTURE OF MUTUAL FUNDS IN INDIA: In India, the mutual fund industry is highly regulated with a view to imparting operational transparency and protecting the investor's interest. The structure of a mutual fund is determined by SEBI regulations. These regulations require a fund to be established in the form of a trust under the Indian Trust Act, 1882. A mutual fund is typically externally managed. It is now an operating company with employees in the traditional sense. Instead, a fund relies upon third parties that are either affiliated organizations or independent contractors to carry out its business activities such as investing in securities. A mutual fund operates through a four-tier structure. The four parties that are required to be involved are a sponsor, Board of Trustees, an asset management company and a custodian. Sponsor: A sponsor is a body corporate who establishes a mutual fund. It may be one person acting alone or together with another corporate body. Additionally, the sponsor is expected to contribute at least 40% to the net worth of the AMC. However, if any person holds 40% or more of the net worth of an AMC, he shall be deemed to be a sponsor and will be required to fulfil the eligibility criteria specified in the mutual fund regulation. Board of Trustees: A mutual fund house must have an independent Board of Trustees, where twothirds of the trustees are independent persons who are not associated with the sponsor in any manner. The Board of Trustees of the trustee company holds the property of the mutual fund in trust for the benefit of the unit-holders. They are responsible for protecting the unit-holder's interest. Asset Management Company: The role of an AMC is highly significant in the mutual fund operation. They are the fund managers i.e. they invest investors' money in various securities (equity, debt and money market instruments) after proper research of market conditions and the financial performance of individual companies and specific securities in the effort to meet or beat average market return and analysis. They also look after the administrative functions of a mutual fund for which they charge management fee. Custodian: The mutual fund is required by law to protect their portfolio securities by placing them with a custodian. Nearly all mutual funds use qualified bank custodians. Only a registered custodian under the SEBI regulation can act as a custodian to a mutual fund. Over the years, with the involvement of the RBI and SEBI, the mutual fund industry has evolved in a big way giving investors an opportunity to make the most of this investment avenue. With a proper structure in place, the industry has been able to cater to a greater number of investors. With the increase in awareness about mutual funds several new players have joined the bandwagon. 10

Types of Mutual Funds Equity Funds Equity funds aim to generate high returns by investing in the shares of companies of different market capitalization. They generate higher returns than debt funds or fixed deposits. How do Equity Funds work? An equity fund invests 60% or more of its assets primarily in equity shares of companies in varying proportions as mentioned in its investment mandate. It might be a purely large-cap fund or a mixture of market capitalization. Moreover, the investing style may be value-oriented or growthoriented. After allocating a major portion of equity shares, the remaining amount may be invested in debt and money market instruments. This is done to address redemption requests raised by the investors. The fund manager keeps buying or selling a particular stock to take advantage of the changing market movements. The expense ratio of equity funds is affected by the frequent buying and selling of equity shares. Currently, SEBI has fixed the upper limit of expense ratio at 2.5% for equity funds and is planning to reduce it further. A lower expense ratio translates into higher returns for investors. 2. Who should Invest in Equity Funds? Your decision to invest in equity funds needs to be guided by risk appetite and investment horizon. Generally, an investor who can stay invested for 5 years or more, needs to get into equity funds. These won’t be suitable for a relatively short-term owing to stock market fluctuations. In case you want to save taxes under Section 80C of the Income Tax Act, then ELSS is regarded as the most appropriate investment haven. ELSS has the shortest lock-in period of 3 years and gives higher returns than other investments eligible under Section 80C. If you are a budding investor who wants to have exposure to the stock market, then large-cap equity funds may be the right choice. These funds invest in equity shares of the top 100 companies of the stock market. These are well-established companies known for giving stable returns over the longterm. In case you are well-versed with the market pulse but want to take calculated risks, you may think of investing in diversified equity funds. These invest in shares of companies across market capitalisation. These give optimum combination of high return and lesser risk as compared to equity funds which invest only in small-cap/mid-caps.

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3. What are the types of Equity Funds? Equity funds is a broad category of funds, but there are several types of equity funds. Equity funds can be further categorised based on their investment mandate and the kind of stocks and sectors they invest in. A. Based on Sector and Themes Equity funds that focus their investments on a particular sector or theme fall under this category. Sector funds are those that invest in one particular industry, like FMCG or Pharma or Technology. Thematic funds are those that follow a particular theme, like emerging consumer companies or international stocks. Since sector funds and thematic funds are concentrated in a particular sector. They tend to be riskier than diversified equity funds because their performance is entirely dependent on the particular sector of the economy. However, sector and thematic funds can be diversified in terms of market capitalisation. B. Based on Market Capitalisation Large-cap equity funds invest primarily in large-cap stocks. Different fund house categorises stocks differently, but large-cap stocks are stocks of the biggest listed companies of the economy. Typically, large-cap companies are well-established companies, which makes large-cap funds stable and reliable investments. Mid-cap equity funds and small-cap equity funds are funds that invest in mid-sized and smaller companies respectively. There are even funds that invest in both mid-cap as well as small-cap funds. They are called mid- and small-cap funds. Since smaller companies are prone to volatility, mid-cap and small-cap funds deliver fluctuating returns. Equity funds that invest across market capitalisation, which is in large-cap, mid-cap and small-cap stocks, are called multi-cap funds. C. Based on the Style of Investing All the funds discussed above follow active investing style wherein the fund manager modifies the portfolio composition to suit market movements. However, there are funds whose portfolio composition imitate a specific index. Equity funds that follow a particular index are called index funds. These are passively-managed funds that invest in the same companies, in the exact same proportions, that make up the index the fund follows. 12

4. Performance of Equity Funds in India Amongst all other categories of mutual funds, equity funds have found to deliver the highest returns. On an average, equity funds have generated before-tax returns in the range of 10%-12%. These returns may fluctuate as per market movements and overall economic conditions. To earn returns in line with your expectations, you need to choose your equity funds carefully. For that, you have to closely follow the stock markets and possess knowledge of the quantitative and qualitative factors. 5. Benefits of Investing in Equity Funds The benefits of investing in mutual funds are many: - Expert money management, Low Cost, Convenience, Diversification, Systematic investments, Flexibility, Liquidity 6. Taxation of Equity Funds When you redeem units of equity funds, you earn capital gains. These capital gains are taxable in your hands. The rate of taxation depends on how long you stayed invested in equity funds; such a period is called the holding period. Capital gains earned on the holding period of up to one year are called short-term capital gains (STCG). STCG are taxed at the rate of 15%. Conversely, capital gains made on holding period of more than 1 year are called long-term capital gains (LTCG). Owing to recent changes in budget 2018, LTCG in excess of Rs 1 lakh will be taxed at 10% without the benefit of indexation. Equity funds can be tax-saving or non-tax saving. ELSS is a tax-saving equity fund. You can save taxes up to Rs 45000 and avail deduction up to Rs 1.5lac by investing in ELSS. It comes with the shortest lock-in period of 3 years 7. SIP – The best way to Invest in Equity Funds The most effective way of investing in equity funds is through a systematic investment plan (SIP). A SIP is usually a monthly investment that happens automatically on a pre-decided date. You give a mandate to the fund company to deduct the investment from your bank account. SIPs give you the benefit of rupee-cost averaging. This means that when the markets are high, you will be allotted fewer units. And when the markets are low, you will get more units for the same amount. This way, you invest at different levels of the market. SIPs make investing a regular habit. SIPs are automated investments that ensure you save the designated amount every month. This way you can invest before you spend since the SIP date is at the beginning of the month for most investors.

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Debt Funds Debt Funds invest in fixed-interest generating securities like corporate bonds, government securities, treasury bills, commercial paper and other money market instruments. This article covers the following: 1. How do Debt Funds work? Buying a debt instrument is similar to giving a loan to the issuing entity. The basic reason behind investing in debt funds is to earn interest income and capital appreciation. The interest that you earn on these debt securities is pre-decided along with the duration after which the debt security will mature. That’s why these securities are called ‘fixed-income’ securities because you know what you’re going to get out of them. Debt funds try to optimize returns by diversifying across different types of securities. This allows debt funds to earn decent returns, but there is no guarantee of returns. However, debt fund returns can be expected in a predictable range, which makes them safer avenues for conservative investors. Debt funds invest in different securities based on their credit ratings. A security’s credit rating signifies whether the issuer will default in making the promised payments. The fund manager of a debt fund ensures that he invests in high credit quality instruments. A higher credit rating means that the entity is more likely to pay interest on the debt security regularly as well as pay back the principal amount upon maturity. 2. Who should Invest in Debt Funds? Debt mutual funds are ideal investments for conservative investors. They are suitable for both the short-term and medium-term investment horizons. Short-term starts from 3 months to 1 years. Medium term is from 3 years to 5 years. For a short-term investor, debt funds like liquid funds may be an ideal investment as compared to keeping your money in a saving bank account. Liquid funds offer higher returns in the range of 7%-9% along with similar kind of liquidity for meeting emergency requirements. For a medium-term investor, debt funds like dynamic bond funds can be ideal to ride the interest rate volatility. As compared to 5-year bank FD, these bond funds offer higher returns. If you want to earn regular income from your investments, then Monthly Income Plans may be a good option.

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3. Types of Debt Funds Just like equity mutual funds, debt mutual funds are also of various types. The primary differentiating factor between debt funds is the maturity period of the instruments they invest in here are the different types of debt funds: a. Dynamic Bond Funds b. Income Funds c. Short-Term and Ultra Short-Term Debt Funds d. Liquid Funds e. Gilt Funds f. Credit Opportunities Funds g. Fixed Maturity Plans

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3A. Dynamic Bonds 1. What is Dynamic Bond? The dynamic bond schemes, as the name suggests, are dynamic in terms of the composition and maturity profile. The objective of a dynamic bond fund is to deliver ‘optimal’ returns in both rising and falling market scenarios. It all depends on the fund manager’s decisions and portfolio management. These funds generally have huge assets under management (aum), running to a portfolio worth several thousand crores. Sometimes, there could be a long pause in between interest rate changes. This can take a hit on the income of bond investors. Therefore, dynamic bond funds is an excellent alternative for those who wish to play to the interest rate cycle. Here, fund managers ‘dynamically’ trade instruments of different maturity periods as per the anticipated change in rates. For instance, during a falling interest rate scenario, a fund manager increases the holdings in long-term instruments like gilts 2. Who can invest in Dynamic Bond Funds? The dynamic bond funds are ideal for investors who might not take the best calls based on interest movement. Investors with a moderate risk appetite and investment horizon of 3-5 years should invest in the dynamic bond funds. An SIP (Systematic Investment Plan) approach will work better by giving you an opportunity to capture the volatility. However, one should always remember that the returns in dynamic bond funds are tied to the interest rates.

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3. Features & Benefits of Dynamic Bonds a. Role of Asset Manager Fund manager’s view of interest rate is extremely crucial. As seen with many funds during early 2017, if RBI takes a step contrary to the expectation of the fund manager, profits could be significantly impacted. b. Macroeconomic Factors Factors like oil prices, fiscal deficit, and new government policies could all impact the returns from the dynamic bond funds. One should always stay invested for longer periods to minimize the shortterm risks. c. Risk Factors Like every other instrument, the dynamic bond funds are also exposed to certain risks. These funds are to an extent better than the short-term funds because they are unable to use the duration strategy. However, if the fund manager is unable to reduce the portfolio as required, the profits earned previously could be affected. d. Tax-Efficiency Bond fund investors have to hold their investment for at least three years to receive indexation perks on capital gains. Here, dynamic bonds differ from other debt funds. This is because of a potential shift in the interest cycle that can result in higher tax incidence. e. Interest The price of bonds is inversely proportional to the changing interest rate. So, if the interest rate is increasing then the price of the bond will decrease and vice versa. As the interest rates continue to fall, the price of the bonds will rally to the extent based on the remaining maturity. The fund manager may also hold some short-term and medium-term corporate bonds that additionally generate interest income. f. Free from usual Debt Fund Mandate Generally, all debt funds should adhere to its investment mandate. Example, a short-term bond fund can only invest in short-term securities and vice versa. However, dynamic bond funds need not follow this rule. They can invest in long-term securities for one month even. It all depends on the interest rate movement.

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4. How a Dynamic Bond fund works Dynamic bonds can switch from long-term to mid-term to short-term securities at short notice. For instance, if the fund house deems that an interest rate cycle is about to fall, it can increase its portfolio tenure. Similarly, if the asset manager thinks that rates have hit the bottom, resulting in greater risks of capital losses on long-term bonds, it can reduce the portfolio’s average maturity abruptly. This way, it can iron out the ‘rate-waves’ more efficiently. Fund managers continuously trade the bonds of varying maturity based on their expectation of change in the interest rate. For instance, the manager will buy more short and medium-term instruments while reducing the holdings in gilts. He may also increase holdings of high-rated corporate bonds to ensure higher accrual income. 5. Things to keep in mind when Investing in Dynamic Bond Funds a. Check if the funds have proven ability to perform across multiple market scenarios. Assess the performance of the fund over at least 5 years b. See how the fund has managed to limit the downside, when interest rates increased in the last few years c. Investors must go for a mix of income accrual funds for steady returns and dynamic bond funds as an additional income source d. Do not go for dynamic bonds if your investment horizon falls below 3 years e. Stay away from New Fund Offers (NFO) in dynamic bonds, and choose one with a minimum of 5-year vintage and suitable track record

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3B. Income Funds 1. What is Income Funds? Income funds are debt mutual funds that deliver you a steady income. They provide with a great opportunity for the investors who want to earn income in the present. The benefit of the diversification of funds is an added advantage as it allows for investment in equities and bonds alike. By investing in multiple asset classes like government securities, certificates of deposits (CD), and bonds, it prioritizes assets with higher interest rates. This generates a high dividend that is either invested or distributed to the investors. 2. Who should Invest in Income Funds? Income funds mainly invest in government securities, corporate bonds, government bonds and money market instruments. Changes in interest rates impact the fund considerably. Hence, it is more suited for investors who are somewhat aggressive risk-seekers as well as those looking to invest long-term. It is to plan and time your entry and exit from these funds judiciously, for the same reason. These funds focus on generating income for the investors rather than wealth creation. As such, they are a great source of financial gain for investors looking for regular and reliable income.

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3. Factors to consider before Investing in Income Funds? a. Risks The risk aspect of income funds depends on the type of holdings. If the equity percentage is more, the risk will also be more. Equities and bond prices have a negative correlation. Income funds investing in both stock and bonds markets provide for a hedge against market risks. b. Returns Income funds deliver you the benefits of compounded interest if the investment horizon exceeds one year. This has been the trend for the last 10 years. c. Tax-Efficiency Do you belong to the 10% and 20% tax slab? Then you should know that income funds held for more than three years are subject to long-term capital gains (LTCG) tax. It is taxable at 20% with indexation benefit. In such cases, bank deposits make more sense. Income funds, however, provide increased returns after taxation to investors in the 30% tax slab. d. Investment Horizon There are some short-term income funds with just a few days’ investment horizon. Here, investors may just want a safe place to park their money at short notice. Medium to long-term debt funds, on the other hand, have a longer investment horizon. e. Cost of the Fund The best time to invest in income funds is when there is going to be a fall in interest rates. Since they make money by either holding the instruments until they mature or by selling them at the right time, the cost of the income funds to vary accordingly.

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4. How to evaluate Income Funds? a. Fund House Reputation While the asset management company faces many risks, nothing could be bigger than the loss of reputation. This is because a first-time investor almost always stumbles to mutual fund investment through word of mouth. b. Fund History There is a temptation to choose a fund that has delivered well in the previous year. However, it is important to consider how long the fund has been in operation and how it has fared across market cycles. c. Past Returns An income fund that has performed well in the previous year may repeat the good work only if the market conditions remain similar. However, you can assess the fund manager’s skill based on returns generated in the past, and how he has handled volatility. d. Financial Ratios There are several risk assessment tools that can track and evaluate income funds, some of which are listed below. Nowadays, investors can easily find this information on mutual fund websites as well as third-party sited. i. Expense Ratio: The investors must consider the expense ratio of the fund (fee to the fund house) when they look at the overall cost and returns. They deduct this fee is from the returns you earn, though not more than 2.5% of the NAV as per the SEBI rules. ii. Information Ratio: It is an indicator of the fund manager’s expertise and skill to deliver riskadjusted returns above the benchmark. Information ratio is nothing but the benchmark return deducted from the overall portfolio return. iii. Sharpe Ratio: Higher returns on paper doesn’t always imply a better performance. You can only assess an income fund’s performance when you judge the returns in line with the risks. So a greater Sharpe ratio indicates better return/performance against the risks per unit the fund undertakes. And you can only use this tool to compare different mutual funds.

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3C. Short-Term and Ultra Short-Term Debt Funds These are debt funds that invest in instruments with shorter maturities, which range from around a year to 3 years. Short-term funds are ideal for conservative investors as these funds are not majorly affected by interest rate movements. 1. How do ultra-short-term mutual funds work? Ultra-short-term funds can be likened to be close cousins of liquid funds. These are fund classes that offer more liquidity than other funds with long investment horizons. According to the rules set by the Securities and Exchange Board of India (SEBI) for liquid funds, it has been decided that such funds can only invest in securities that mature up to 91 days. However, these rules do not apply to ultra-short-term bond funds. These bonds can, therefore, invest in securities that mature both before or after the 91-day period. Typically, the investment horizon for these ultra-short-term funds ranges from a week to about 18 months. So, if you have extra funds that you wish to park for 1-9 months and earn some dividends from, then this investment vehicle can be the one you are looking for. 2. Who should invest in ultra-short-term mutual funds? Experts suggest that ultra-short-term funds should be used by investors for both short-term investments need as well as for systematic transfer plans (STPs), in place of liquid funds. Say you wish to invest a lump sum amount in an equity fund. Now, instead of putting all your cash in the equity fund in a one-time lump sum investment, it is advisable that you put the money in an ultrashort-term fund (belonging to the same fund house). You can then give instructions to your fund manager to switch a regular sum every month to your equity fund. This way, you get two positives: your money will lie in an ultra-short-term fund which offers high liquidity, and will also earn slightly higher dividends than a normal liquid fund would.

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3. Things to Consider as an Investor a. Risk Unlike other debt funds, the ultra-short-term debt funds are somewhat immune to interest rate risks because of the short maturity of their underlying assets. However, as compared to liquid funds, these funds are pretty risky. The investment strategy of the fund manager may introduce credit risk when he incorporates low-credit rated securities in the expectation of an upgrade in future. Moreover, the introduction of government securities may increase the volatility of the fund more than expected. b. Return An investor can expect returns of around 7-9% from ultra-short-term funds; given that every other factor falls into place. If you compare this return rate to the other fund categories, you will see that these returns are moderately higher than what a liquid fund, for instance, can earn you over the same 1-9-month time horizon as Ultra short-term funds are riskier than liquid funds. Even though these funds are fixed-income havens, they don’t offer guaranteed returns. The Net Asset Value (NAV)of these funds tends to fall with a rise in the overall interest rates in the economy. Hence, they are suitable for a falling interest rate regime. c. Investment Horizon Ultra-short-term funds earn from the coupon of short-term instruments. The prices of these securities may change on a day-to-day basis and have a relatively longer maturity. These are much more volatile than liquid funds and a short time frame may seem inadequate to generate sufficient returns. As compared to liquid funds, you need to hold these funds for comparatively longer horizon owing to a higher average maturity of the underlying securities. d. Financial Goals You may use these funds for a variety of purposes. If you need to park money for a period of 3 months to a year, then these funds may come handy. Additionally, you may want these to transfer your funds to a riskier haven like equity funds. Put a lump sum in these funds and initiate a systematic transfer plan (STP) to equity funds. You may look at them as an additional haven to be used as an emergency fund. If you need monthly income, then invest a portion of your superannuation portfolio in these and initiate a systematic withdrawal plan (SWP).

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3D. Liquid Funds Liquid funds invest in debt instruments with a maturity of not more than 91 days. This makes them almost risk-free. Liquid funds have seen negative returns very rarely. These funds are good alternatives to savings bank accounts as they provide similar liquidity and higher returns. Many mutual fund companies offer instant redemption on liquid fund investments through special debt cards. 1. What are Liquid funds? Liquid funds are mutual fund schemes that invest their corpus in financial instruments such as Bank fixed deposits, Treasury Bills, Bill Rediscounting, Commercial Paper and other debt securities with maturities up to 90 days. The NAV (Net Asset Value) of the funds is calculated for 365 days, unlike other debt mutual funds where NAV is computed for business days only. Liquid Funds have no restrictions of a lock-in period. These funds allow withdrawals to be processed within 24 hours on business days. So for all transactions received within a cut of time (say 2:00 pm) where money is also realized within the cut-off time, the units are allotted as per previous day NAV. Liquid funds have the lowest interest risk associated with all the class of debt funds. This is because they primarily invest in fixed income securities with short maturity. Another notable benefit of liquid funds is that they do not have any entry or exit load. 2. Who should invest in liquid funds Since these funds provide liquidity and not high returns, it is advised that investors looking to park their idle money should consider liquid funds as a viable option. However, one should be varied enough not to put one’s emergency corpus in liquid funds since liquid funds provide redemption in such a way that money is the credit on your account only the next day. So parking all the emergency fund in liquid funds is not a good practice. Ideally, liquid funds should be utilized to achieve your short-term objectives. Since some funds generate around 8% to 9% returns, they should definitely be preferred over savings account which provides 4% to 6% returns. In fact, the nature of their portfolio allocation is such that there is not much risk of volatility or default associated with liquid funds provided one invests in high rated (AAA or AA) liquid funds.

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3. Things to consider as an investor a. Fund Objectives Liquid funds are least risky of all the debt funds. The Net NAV doesn’t fluctuate too frequently because the underlying assets mature within 60-91 days. This somehow prevents the fund NAV from getting impacted too much by the underlying asset price fluctuations. However, there might be a chance of a sudden drop in NAV in case of a sudden downgrade of the credit rating of the underlying security. To put it simply, liquid funds are not completely risk-free. b. Expected Returns Historically, liquid funds have been found to generate returns in the range of 7%-9%. It is way higher than the mere 4% returns obtained on savings bank account. Even though the returns on liquid funds are not guaranteed, in most of the cases they have delivered positive returns upon redemption. c. Cost Liquid funds charge a fee to manage your money called an expense ratio. Till now SEBI had mandated the upper limit of expense ratio to be 2.25%. Considering the hold till maturity strategy of the fund manager, liquid funds maintain a lower expense ratio to provide relatively higher returns over a short period of time. d. Investment Horizon Liquid funds are exclusively meant to invest surplus cash over a very short period of time say up to 3 months. Such a short horizon helps to realize the full potential of the underlying securities. In case you have a longer investment horizon of up to 1 year, then you may consider investing in ultrashort-term funds to get relatively higher returns. e. Financial Goals If you want to create an emergency fund, then liquid funds can prove to be very useful. In addition to receiving higher returns, these will help you to take out your money easily in case of emergencies.

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4. How to evaluate Liquid funds? a. Fund returns Fund performance plays a crucial role in the selection of appropriate funds. You may seek funds which have delivered consistent returns over different time horizons. Choose funds which have outperformed their benchmark and peer funds in a consistent manner across say 3, 5 and 10 years. However, remember to analyse the fund performance which matches your investment horizon to get relevant results. b. Fund history History of the fund house becomes an important criterion towards fund selection. Fund houses which have a strong history of consistent performance in the investment domain may be trusted to stay resilient during slumps and market rally. A fund house that has a consistent track record for at least say 5 to 10 years is the one that you may go for. c. Expense ratio Expense ratio shows the operating efficiency of a mutual fund scheme. It indicates how much of your invested amount is being used to manage expenses of the fund. A lower expense ratio translates into higher take-home returns for the investor. Choose a fund with a lower expense ratio which can give you superior performance. d. Financial ratios In addition to using plain vanilla returns, there is a range of financial ratios available which can be used to analyse the performance of the fund from different angles. You may employ tools like standard deviation, Sharpe ratio, alpha and beta to examine the risk-adjusted returns and relative riskiness of a fund. A fund had higher standard deviation and beta is riskier than a fund with lower beta and standard deviation. Look for funds with a higher Sharpe ratio which means it gives higher returns on every additional unit of risk taken.

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3E. Gilt Funds Gilt Funds invest in only government securities. Government securities are high-rated securities and come with a very low credit risk. It’s because the government seldom defaults on the loan it takes in the form of debt instruments. This makes gilt funds ideal for risk-averse fixed income investors. 1. How do Gilt Funds work? Gilt funds are a type of debt funds which invests in government securities, central government loans and state development loans of medium to long-term horizon. When the Government of India requires funds, it approaches the Reserve Bank of India (RBI) for borrowing needs. Apart from being the apex bank, RBI also acts as banker to the government. So, the RBI lends the money to the government after taking it from other entities like insurance companies and banks. In return for the loan, the RBI issues government securities having a specific tenure, which are subscribed by the fund manager of a gilt fund. Upon maturity, the gilt fund returns the government securities and receives the money in return. For an investor, gilt funds can be an ideal blend of safety and reasonable returns. However, the returns are highly dependent on the movement of interest rates and a falling interest rate regime would be the best time to invest in gilt funds.

2. Who should Invest in Gilt Funds? As Gilt funds only invest in government securities of different time horizons, these funds satisfy the security needs of the investors. You may thus consider the underlying assets of Gilt funds as AAA grade investments. Gilt funds are not the same as bond funds because the latter may allocate a part of the assets in corporate bonds which can be quite risky. However, gilt funds invest in low-risk debt such as government securities which ensures the preservation of capital along with moderate returns. As compared to a typical equity fund, a gilt fund provides better asset quality, even though the returns might be relatively lower. However, it is ideal investment haven for those investors who are risk averse and are seeking an opportunity to invest in government securities. Hence, Gilt Funds are meant for individuals who prefer the safety of investments over higher returns. Before finalizing on a gilt fund remember to keep your risk appetite and financial goals in mind.

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3. Things to consider as an Investor a. Risk Unlike corporate bond funds, Gilt funds are the most liquid instruments because these funds don’t carry credit risk. The reason is that government has not defaulted on fulfilling its obligations. However, Gilt funds suffer largely from interest rate risk. The net asset value (NAV) of the fund drops sharply in a rising interest rate regime. This happens because it leads to fall in the prices of the underlying asset of the fund. b. Returns Gilt funds have found to generate returns of as high as 12%. However, returns from a Gilt Funds are not guaranteed and highly variable with the changes in the overall interest rates. Hence, it would be beneficial to invest in Gilt funds when the interest rate is falling in the economy. Additionally, when the economy as a whole is facing a slump then Gilt funds may deliver higher returns than other asset classes like equity funds. c. Cost Gilt funds charge an annual fee known as expense ratio which takes care of fund manager’s fee and other associated costs. This is expressed as a percentage of fund’s average asset under management. The upper limit of expense ratio for debt funds has been specified by SEBI as 2.25%. However, operating costs of a particular fund may depend on the investment strategy implemented by the fund manager. Ultimately, you need to choose a fund with a lower expense ratio. d. Investment Horizon Gilt funds invest in government securities which have a maturity of medium to long-term. In fact, the average maturity of a gilt fund portfolio may be around 3 to 5 years. In case the fund manager is following a dynamic strategy, he keeps buying and selling the securities as per the changes in the interest rate environment. If you are thinking of investing in gilt funds, you need to have an investment horizon of at least 3 to 5 years.

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3F. Credit Opportunities Funds These are relatively newer debt funds. Unlike other debt funds, credit opportunities funds don’t invest according to the maturities of debt instruments. These funds try to earn higher returns by taking a call on credit risks. These funds try to hold lower-rated bonds that come with higher interest rates. Credit opportunities funds are relatively riskier debt funds. 1. Credit Opportunities Debt Funds Credit opportunities funds take credit risk for the sake of generating high yield. For this, they adopt the accrual strategy to provide a better return. Accrual strategy is nothing but buying a company with lower credit ratings at the moment, hoping that the ratings go up. Here, the asset manager adds a lower-rated paper in the hopes of generating higher returns in future. They often consider any fund that is rated below AA a bit on the riskier side. Of course, you should never treat ratings as the last word in fund assessment. Sometimes fund managers also choose a lower-rated paper and anticipate a boost in rating, which will increase its price. But, it also comes with added risks of default. Franklin India Short Term Income Plan, Religare Invesco Credit Opp Fund and DSP BlackRock Opportunities Fund are some of the big names in this arena. 2. Who should Invest in Credit Opportunities Fund? Even though it is a debt fund, credit opportunity funds come with a fair amount of risks. For instance, sometimes the lower-rated papers too have known to be downgraded against expectations. Investors should remember that rise and fall are a frequent feature of these funds – so this is not for the faint-hearted. Investors who seek a steady income and wants to keep the risk factor minimal should stay away from credit opportunities funds. Also, people belonging to the highest tax slab looking to save on taxes can opt for this. They need to pay Long Term Capital Gains tax of only 20% rather than 30%.

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3. Features & Benefits of Credit Opportunity Funds a. Tax-Efficiency Dividends are exempt from tax, but the scheme should pay 28.84% DDT (Dividend Distribution Tax). It is an added expense to the company. Returns you earn within 3 years of investment is subject to short-term capital gains tax. This will be as per your tax slab rate. And LTCG tax is only 20% for all investors. b. Liquidity Credit opportunity funds has more risks in terms of liquidity. For instance, corporate bonds with low rating is low on liquidity. It will be tough for the fund manager to exit if a lower-rated bond defaults or downgrades. c. Role of Fund Manager It all depends on the choice of company by the fund manager Ideally, credit rating should not be the only criteria fund managers should look for. The scope of company, and its growth potential should also be significant deciding factors. If the firm has more chances of growth, then it will become a rewarding choice of the fund manager. 4. How do Credit Opportunities Funds work? Credit opportunities funds make returns either by accruing the coupon payments arising from the securities held by it or by finding benefit from a compression in yield spreads. The funds take on a credit risk by investing in lower-rated securities, that have the can be upgraded in the future. The Interest risk of credit opportunities funds are limited and also, the average credit quality profile of these funds is quite commendable while keeping the weighted average portfolio default probability very low. Since credit opportunities funds are popular for giving 2-3% extra returns as compared to risk-free investments, their risk-return trade-offs can be quite high.

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5. Things to keep in mind when Investing in COFs a. Unless you are market-savvy, do not take any credit-related decision yourself, particularly in greater quantities. Make these calls via diversified mutual funds b. If you are investing in this type of accrual fund, always choose larger-sized funds. This is because their greater corpus gives them better scope to diversify and spread the risks c. Choosing a fund with a lesser expense ratio can be a good idea, especially for first-time investors d. Always go for a fund with a reputed and experienced fund manager e. Make sure that the fund’s portfolio is not overly concentrated in any specific group’s securities f. Based on your risk profile, keep your credit opportunity investments 10%-25% of your fixedincome portfolio

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3G. Fixed Maturity Plans Fixed maturity plans (FMP) are closed-end debt funds. These funds also invest in fixed income securities like corporate bonds and government securities, but they come with a lock-in. All FMPs have a fixed horizon for which your money will be locked-in. This horizon can be in months or years. Investments in FMPs can be made only during the initial offer period. An FMP is like a fixed deposit that can deliver superior, tax-efficient returns but do not guarantee returns. 1. What are Fixed Maturity Plans? Fixed maturity plans primarily invest in fixed income instruments like certificates of deposits or bonds that lock in the yields that are currently available. These are closed-ended mutual fund schemes with a pre-defined period of tenure. This tenure can range between 30 days to as long as five years. The most commonly available tenures range from 30 days to 180, 370 and 395 days. 2. Fixed Deposits Vs Fixed Maturity Plans A lot of people confuse a fixed maturity plan with a bank fixed deposit. Though the lock in tenure is a common denominator, fixed maturity plans are debt funds that invest in company debt and government securities. They do not carry any component of equity barring the exception when a fixed maturity plan opts for a limited component of equity. FDs

FMPs

Returns

Guaranteed returns

Indicative Returns

Tax

Interest income is added to your annual income and taxed as per the applicable slab.

=> In FMP-Dividend – a Dividend Distribution Tax [DDT] is levied

Maturity Period

Varying maturity period options

Varying maturity period options

Liquidity

Ease of premature redemption, higher liquidity

Restricted liquidity

=> In FMP-Growth – Capital gains tax apply

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3. Features of Fixed Maturity Plans a. Fixed Tenure Fixed Maturity Plans offer investors the option of choosing a plan that suits their investment horizon and their cash flow needs. Investors get to know in advance approximately how much yields they would get by investing at the NFO stage. b. Closed-ended funds This means the investment option is made available only during the initial offer period of the scheme, and the redemption can only be made during the time of maturity. There is an option though, where unitholders who have units held in demat mode, can sell their units on the stock exchange which have units of a fixed maturity plan schemes listed. This way they can exit the fixed maturity plan ahead of its tenure. c. Investment strategy Investment of Fixed Maturity Plans can be in the form of commercial papers (CP), certificate of deposits (CD), corporate bonds, money market instruments, government issued securities, nonconvertible debentures (NCD) of highly rated and reputed companies, etc. with maturities that fall in line with the tenure of the scheme. d. Sensitivity to Rate of Interest Fixed Maturity Plans have minimum exposure to the risk of interest rates because the instruments are held by the fund till the maturity which allows it a fixed rate of return. e. Credit Risk Owing to the fact that Fixed Maturity Plans invest mostly in highly rated credit instruments, the risk of low credit is minimized. Also, there is very little risk of liquidity involved. f. Balancing of Portfolio Fixed Maturity Plans offer stable returns for the tenure and work as asset allocation tools. This allows the scheme to find investors from a wide investor base.

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4. Things to Consider as an Investor in Debt Funds? a. Risk Debt funds suffer from credit risk and interest rate risk which make them riskier than bank FDs. In credit risk, the fund manager may invest in low-credit rated securities which have the higher probability of default. In interest rate risk, the bond prices may fall due to an increase in the interest rates. b. Return Even though debt funds are fixed-income havens, they don’t offer guaranteed returns. The Net Asset Value (NAV) of a debt fund tends to fall with a rise in the overall interest rates in the economy. Hence, they are suitable for a falling interest rate regime. c. Cost Debt funds charge a fee to manage your money called an expense ratio. Till now SEBI had mandated the upper limit of expense ratio to be 2.25%. Considering the lower returns generated by debt funds as compared to equity funds, a long-term holding period would help in recovering the money gone out by way of the expense ratio. d. Investment Horizon You can invest in Debt funds for a range of investment horizons. If you have a short-term horizon of 3 months to 1 year, you may go for liquid funds. Conversely, short-term bond funds can be considered for a tenure of 2 to 3 years. In case of an intermediate horizon of 3 to 5 years, dynamic bond funds would be appropriate. Basically, the longer the horizon, the better the returns.

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Hybrid Funds Hybrid Funds are Mutual Funds that invest in both Debt and Equity to achieve the perfect blend of maximum diversification and decent returns. The choice of Hybrid Fund depends on your risk preferences and Investment objective.

1. How do Hybrid Funds work? Hybrid funds aim to achieve wealth appreciation in the long-run and generate income in the shortrun via a balanced portfolio. The fund manager allocates your money in varying proportions in equity and debt based on investment objective of the fund. Hybrid funds can be equity-oriented or debt-oriented. When the fund manager invests 65% or more of the fund’s assets in equity and rest in debt and money market instruments, it’s called an equity-oriented fund. Conversely, an asset allocation of 60% or more in debt and rest in equity is called a debt-oriented fund. For the sake of liquidity, some part of the fund would also be invested in cash and cash equivalents. The equity component of the fund comprises of equity shares of companies across industries like FMCG, finance, healthcare, real estate, automobile, etc. The debt component of the fund constitutes the investment in fixed-income havens like government securities, debentures, bonds, treasury bills, etc. The fund manager may buy/sell securities to take advantage of market movements.

2. Who should Invest in Hybrid Funds? Hybrid funds are regarded as safer bets than pure equity funds. These provide higher returns than pure debt funds and are a favourite among conservative investors. Budding investors who are eager to take exposure in equity markets can think of hybrid funds as the first step. As these are an ideal blend of equity and debt, the equity component helps to ride the equity wave. At the same time, the debt component of the fund provides a cushion against extreme market turbulence. In that way, you receive stable returns instead of a total burnout that might be possible in case of pure equity funds. For the less conservative category of investors, the dynamic asset allocation feature of some hybrid funds becomes a great way to milk the maximum out of market fluctuations.

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3. Types of Hybrid Funds Hybrid funds can be differentiated as per their asset allocation. Some types of hybrid funds have a higher equity allocation while others allocate more to debt. Let’s have a look in detail. a. Balanced Funds These are the most popular type of hybrid funds. Balanced funds invest at least 65% of their portfolio in equity and equity-oriented instruments. This allows them to qualify as equity funds for the purpose of taxation. It means that gains over and above Rs 1 lakh from balanced funds held for a period of over 1 year are taxable at the rate of 10%. The rest of the fund’s assets are invested in debt securities and some amount might also be kept in cash. Balanced funds are ideal investments for conservative investors who wish to benefit from the return-earning capacity of equities without taking too many risks. The fixed income exposure of balanced funds helps in mitigating equity-related risks. b. Monthly Income Plans These are hybrid funds that invest predominantly in debt instruments. A monthly income plan (MIP) would generally have 15-20% exposure to equities. This would allow it to generate higher returns than regular debt funds. MIPs provide regular income to the investor in the form of dividends. An investor can choose the frequency of dividends, which can be monthly, quarterly, half-yearly or annually. These options are available in the dividend option. MIPs also come with the growth option that doesn’t pay out a dividend but lets the investments grow in the fund’s corpus. Hence, MIPs should not be treated as a mere monthly income investment. The name can be misleading to new investors. Consider MIPs to be hybrid funds that invest mostly in debt and some amount of equities. c. Arbitrage Funds Arbitrage funds are equity-oriented mutual funds that try to take advantage of the mispricing in the price of a stock between the derivatives market and futures market. The fund manager looks for such opportunities to maximise returns by buying the stock at a lower price in one market and selling it at a higher price in another market. However, arbitrage opportunities are not always available easily. In the absence of arbitrage opportunities, these funds might stay invested in debt instruments or cash. This is why they can be considered to be hybrid funds. By design, arbitrage funds are relatively safer funds. They are treated like equity funds as regards taxability and long-term returns earned from them are taxable.

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4. Things an Investor should consider a. Risk It would be unwise to assume hybrid funds to be completely risk-free. Any instrument which invests in equity markets will have some kind of risk. It might be less risky than pure equity funds but you need to exercise caution and portfolio rebalancing regularly. b. Return Hybrid funds don’t offer guaranteed returns. The performance of underlying securities affect Net Asset Value (NAV) of these funds and may fluctuate due to market movements. Moreover, these might not declare dividends during market downturns. c. Cost Hybrid funds would charge a fee for managing your portfolio which is known as the expense ratio. Before investing in a hybrid fund, ensure it has a low expense ratio than other competing funds. This translates into higher take-home returns for the investor. d. Investment Horizon Hybrid funds may be ideal for a medium-term investment horizon of say 5 yrs. If you want to earn a risk-free rate of return, you may go for arbitrage funds which bet on price differentials of securities in different markets. e. Financial Goals Hybrid funds may be used for intermediate financial goals like buying a car or funding higher education of one’s own. Retirees may invest in balanced funds and go for a dividend option to supplement their post-retirement income. f. Tax on Gains The equity component of hybrid funds is taxed like equity funds. Long-term capital gains in excess of Rs 1 lakh on equity component are taxed at the rate of 10%. Short-term capital gains on equity component are taxed at the rate of 15%. The debt component of hybrid funds is taxed as debt funds. STCG from debt component is added to the investor’s income and taxed according to his income slab. LTCG from debt component is taxed at the rate of 20% after indexation and 10% without the benefit of indexation.

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How Mutual Fund Companies Work Mutual funds are virtual companies that buy pools of stocks and/or bonds as recommended by an investment advisor and fund manager. The fund manager is hired by a board of directors and is legally obligated to work in the best interest of mutual fund shareholders. Most fund managers are also owners of the fund, though some are not. There are very few other employees in a mutual fund company. The investment advisor or fund manager may employ some analysts to help pick investments or perform market research. A fund accountant is kept on staff to calculate the fund's net asset value (NAV), or the daily value of the mutual fund that determines if share prices go up or down. Mutual funds need to have a compliance officer or two, and probably an attorney, to keep up with government regulations. Most mutual funds are part of a much larger investment company apparatus; the biggest have hundreds of separate mutual funds. Some of these fund companies are names familiar to the general public, such as Fidelity Investments, the Vanguard Group, T. Rowe Price and Oppenheimer Funds. Mutual Fund Fees In mutual funds, fees are classified into two categories: annual operating fees and shareholder fees. The annual fund operating fees are charged as an annual percentage of funds under management, usually ranging from 1-3%. The shareholder fees, which come in the form of commissions and redemption fees, are paid directly by shareholders when purchasing or selling the funds. Annual operating fees are collectively as the expense ratio. A fund's expense ratio is the summation of its advisory fee or management fee and its administrative costs. Additionally, sales charges or commissions can be assessed on the front-end or back-end, known as the load of a mutual fund. When a mutual fund has a front-end load, fees are assessed when shares are purchased. For a backend load, mutual fund fees are assessed when an investor sells his shares. Sometimes, however, an investment company offers a no-load mutual fund, which doesn't carry any commission or sales charge. These funds are distributed directly by an investment company rather than through a secondary party.

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Insurance What is 'Insurance' Insurance is a contract, represented by a policy, in which an individual or entity receives financial protection or reimbursement against losses from an insurance company. The company pools clients' risks to make payments more affordable for the insured. Insurance policies are used to hedge against the risk of financial losses, both big and small, that may result from damage to the insured or her property, or from liability for damage or injury caused to a third party.

Types of Insurance 

Personal Lines Insurance



Classified Insurance



Life Insurance



Standard Auto Insurance



Commercial Lines Insurance



Annual Renewable Term (ART) Insurance



Business Insurance



Additional Insured



Liability Insurance



Casualty Insurance

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Personal Lines Insurance What is 'Personal Lines Insurance' Personal lines insurance includes property and casualty insurance products that protect individuals from losses they couldn’t afford to cover on their own. These types of insurance lines make it possible to do things like drive a car and own a home without risking financial ruin. Personal lines insurance and commercial lines insurance each make up about half of the property and casualty insurance market.

Availability of Personal Lines Insurance Sometimes, individuals may be unable to purchase a policy for a particular situation because they pose too great of a risk to the insurance company. For example, someone with a history of cancer might not be able to purchase life insurance. Another example would be a homeowner who wants to buy flood insurance, but whose house is below the flood plain. In some cases, high-risk individuals can still purchase insurance, but they will have to pay above-average premiums to compensate the insurer for the extra risk. One common example of this is high-risk auto insurance for drivers, who've received multiple moving traffic violations over a short time or who've been at fault in multiple accidents over a short period of time.

Classified Insurance DEFINITION of 'Classified Insurance' Classified insurance is coverage provided to a policyholder that is considered riskier and thus less desirable to the insurer. Classified insurance, also known as substandard insurance, is most commonly associated with health insurance and life insurance.

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Life Insurance What is 'Life Insurance' Life insurance is a contract between an insurer and a policyholder in which the insurer guarantees payment of a death benefit to named beneficiaries upon the death of the insured. The insurance company promises a death benefit in consideration of the payment of premium by the insured.

How Life Insurance Works There are three major components of a life insurance policy. Death benefit is the amount of money the insurance company guarantees to the beneficiaries identified in the policy upon the death of the insured. The insured will choose their desired death benefit amount based on estimated future needs of surviving heirs. The insurance company will determine whether there is an insurable interest and if the insured qualifies for the coverage based on the company's underwriting requirements. Premium payments are set using actuarially based statistics. The insurer will determine the cost of insurance (COI), or the amount required to cover mortality costs, administrative fees, and other policy maintenance fees. Other factors that influence the premium are the insured’s age, medical history, occupational hazards, and personal risk propensity. The insurer will remain obligated to pay the death benefit if premiums are submitted as required. With term policies, the premium amount includes the cost of insurance (COI). For permanent or universal policies, the premium amount consists of the COI and a cash value amount. Cash value of permanent or universal life insurance is a component which serves two purposes. It is a savings account, which can be used by the policyholder, during the life of the insured, with cash accumulated on a tax-deferred basis. Some policies may have restrictions on withdrawals depending on the use of the money withdrawn. The second purpose of the cash value is to offset the rising cost or to provide insurance as the insured ages.

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Life Insurance Riders Many insurance companies offer policyholders the option to customize their policies to accommodate their personal needs. Riders are the most common way a policyholder may modify their plan. There are many riders, but availability depends on the provider. The accidental death benefit rider provides additional life insurance coverage in the event the insured's death is accidental. The waiver of premium rider ensures the waiving of premiums if the policyholder becomes disabled and unable to work. The disability income rider pays a monthly income in the event the policyholder becomes disabled. Upon diagnosis of terminal illness, the accelerated death benefit rider (ADB) allows the insured to collect a portion or all of the death benefit. Each policy is unique to the insured and insurer. Reviewing the policy document is necessary to understand coverages in force and if additional coverage is needed.

Standard Auto Insurance WHAT IS 'Standard Auto Insurance' Standard auto insurance refers to the most basic auto insurance offered to drivers who fall into an average risk profile.

Qualifications for Standard Auto Insurance A driver must meet certain qualifications to be able to purchase a standard insurance policy. These qualifications often include a clean driving record with a history of few claims. The type of vehicle a driver owns can also affect their ability to purchase a standard insurance policy. Auto insurance companies rate drivers on different categories of risk, including age, gender and credit history. In addition to standard auto insurance, other types of insurance, such as comprehensive and collision, can be added to a consumer’s policy for more protection. Collision insurance reimburses the insured for damage sustained to their personal automobile due to the fault of the insured driver. This type of insurance is often added as an extension of a basic policy. Comprehensive insurance covers damage to a consumer’s car from causes other than a collision, such as damage from a tornado, vandalism, collapsing garage, or dents caused by a run-in with a deer. 42

Commercial Lines Insurance What is 'Commercial Lines Insurance'? Commercial lines insurance includes property and casualty insurance products for businesses. Commercial lines Insurance helps keep the economy running smoothly by protecting businesses from potential losses they couldn’t afford to cover on their own, which allows businesses to operate when it might otherwise be too risky to do so.

Other Types of Commercial Lines Insurance Debris Removal Insurance: This insurance covers the cost of removing debris after a catastrophic event, such as a fire burning a building down. Before rebuilding, the remains of the old building must be removed. Property insurance alone typically won't cover the costs of removing the debris. Builder's risk insurance: This coverage insures buildings while they are being constructed. Glass Insurance: Glass insurance covers broken windows in a commercial establishment. Inland Marine Insurance: This insurance covers property in transit and other people's property on your premises. For example, this insurance would cover fire-damage to customers' clothing from a fire at a dry-cleaning business. Business Interruption Insurance: This insurance covers lost income and expenses resulting from property damage or loss. For example, if a fire forces you to close your doors for two months, this insurance would reimburse you for salaries, taxes, rents, and net profits that would have been earned during the two-month period.

Annual Renewable Term (ART) Insurance DEFINITION of 'Annual Renewable Term (ART) Insurance' A form of term life insurance that offers a guarantee of future insurability for a set period of years, although premiums are paid every year on the basis of a one-year contract. As such, the premiums will rise over time as the insured person ages. This type of insurance is designed for short-term insurance needs.

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Business Insurance What is 'Business Insurance'? Business insurance coverage protects businesses from losses due to events that may occur during the normal course of business. There are many types of insurance for businesses including coverage for property damage, legal liability and employee-related risks. Companies evaluate their insurance needs based on potential risks, which can vary depending on the type of environment in which the company operates.

Types of business insurance that small business owners might consider: 

Professional Liability Insurance

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Property Insurance

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Home-Based Businesses

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Product Liability Insurance

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Vehicle insurance

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Business interruption insurance

Professional Liability Insurance Professional liability insurance insures against negligence claims that result from mistakes or failure to perform. There is no one-size-fits-all professional liability coverage. Each industry has its own unique concerns that should be addressed.

Property Insurance Property insurance covers equipment, signage, inventory and furniture in the event of a fire, storm or theft. However, it doesn't cover mass-destruction events like floods and earthquakes. If your area is at risk for these issues, you'll need a separate policy.

Home-Based Businesses Homeowner’s policies don’t cover home-based businesses like commercial property insurance covers businesses. If you're operating a home-based business, inquire about additional coverage for equipment and inventory.

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Product Liability Insurance If your business manufactures products to sell, product liability insurance is very important. Any business can find itself named in a lawsuit due to damages caused by its products. Product liability insurance protects a business in such cases.

Vehicle insurance Any vehicles used for business should be fully insured. At the very least, businesses should insure against third-party injury, but comprehensive insurance will cover the vehicle in an accident, as well. If employees are using their own cars for business, their own personal insurance will cover them in the event of an accident. One major exception is if a person is delivering goods or services for a fee, including delivery personnel.

Business interruption insurance This type of insurance is especially applicable to companies that require a physical location to do business, such as retail stores. Business interruption insurance compensates a business for its lost income during events that cause a disruption to the normal course of business.

Additional Insured What is 'Additional Insured'? Additional insured is a type of status associated with general liability insurance policies that provides coverage to other individuals/groups that were not initially named. With an additional insured endorsement, the additional insured will then be protected under the named insurer's policy and can file a claim in the event that they are sued.

Additional Insured Costs The cost of adding an additional insured is typically low, compared to the costs of the premium. Insurance company underwriting departments often consider the additional risk associated with additional insureds as marginal. Additional insurance coverage and endorsements are the subject of frequent disagreements, misunderstandings and litigation. The disagreements are often about whether the additional insurance coverage should cover "independent negligence" by the additional insured, or if it should only cover liabilities caused by the named insured's acts.

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Liability Insurance What is 'Liability Insurance'? Liability insurance is insurance that provides protection against claims resulting from injuries and damage to people and/or property. Liability insurance policies cover both legal costs and any legal payouts for which the insured would be responsible if found legally liable. Intentional damage and contractual liabilities are typically not covered in these types of policies.

Various Types of Liability Insurance Business owners are exposed to a range of liabilities, any of which can subject their assets to substantial claims. All business owners need to have in place an asset protection plan built around available liability insurance coverage. Here are the main types of liability insurance: Employer’s liability and workers' compensation is a type of mandatory coverage for employers, which protects the business against liabilities arising from injuries or the death of an employee. Product liability insurance is for businesses that manufacture products for sale on the general market. Product liability insurance protects against lawsuits arising from injury or death caused by their products. Indemnity insurance provides coverage to protect a business against negligence claims due to financial harm resulting from mistakes or failure to perform. Director and officer liability coverage is for a business that has a board of directors or officers, with the insurance covering them against liability if the company is sued. While a corporation by definition offers some amount of personal protection against liability to employees and directors, some companies choose to provide additional protection to those key members of the executive team. An umbrella liability policy is a personal liability policy designed to protect against catastrophic losses. Generally, umbrella liability coverage kicks in when the liability limits of other insurance are reached.

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Commercial liability insurance is a standard commercial general liability policy (also known as comprehensive general liability insurance) that provides insurance coverage for lawsuits arising from injury to employees and public, property damage caused by an employee and injuries suffered by the negligent action of employees. The policy may also cover infringement on intellectual property, slander, libel, contractual liability, tenant liability and employment practices liability. The comprehensive general liability (CGL) policy is tailor-made for any small or large business, partnership or joint venture businesses, a corporation or association, an organization, or even a newly acquired business. Insurance coverage in a CGL policy includes bodily injury, property damage, personal and advertising injury, medical payments, and premises and operations liability. In the case of lawsuits, insurers provide coverage for compensatory and general damages; punitive damages are generally not covered under the policy, although they may be covered if they are permitted by the jurisdiction of the state in which the policy was issued. The amount of risk associated with the business and the size of the business determines the total coverage. The policy provides compensation for defending or investigating a lawsuit; court costs including attorneys' fees, police report costs and witness fees, any judgment or settlement resulting from the lawsuit, medical expenses for the injured persons, etc. Here, insurers retain the right to defend any suit against the insured company arising from bodily or property damages.

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Closing the Gaps in General Liability Insurance Commercial general liability insurance protects against most legal hassles, but it won't protect directors and officers from being sued or protect against errors and omissions. For these special cases, you need specialized policies. Below, are lesser-known liability insurance policies that are worth considering for your professional coverage needs.

Errors & Omissions (E&O) Liability Insurance What it covers: Errors & Omissions policies offer insurance coverage for lawsuits arising from rendering negligent professional services or failing to perform professional duties. Lawyers, accountants, architects, engineers, or any business providing a service to a client for a fee should purchase this form of insurance. Coverage: Usually, the coverage includes legal, judgment and settlement expenses up to the limit of the policy. Coverage is offered as per the risk exposures of the insured, as some professionals have more potential exposure than others. Coverage typically starts at $1 million and may have a deductible of $1,000 to $25,000 per claim. Exclusions: Common exclusions include claims arising from criminal, fraudulent or dishonest acts, bodily injury or property damage, employment-related claims and punitive damages. Other considerations: Factors influencing insurance cost include location, class of business and claims experience of the individual and the industry. These policies are offered on a claims-made basis, in which claims must be made and reported during the policy period. E&O policies have a retroactive date wherein the insurer will not cover claims arising out of acts committed before the retroactive date. Retroactive coverage is available but comes with higher premiums. Most claimsmade policies allow individuals to buy "tail coverage." This extended reporting period covers claims made after you discontinue your professional liability coverage, often because of retirement. The main purpose of tail coverage is to protect the individual from claims that occurred during their active professional practice but were only reported after they retire or quit practicing. If an E&O policy is canceled and the extended reporting period coverage is not bought, then the entire coverage stops. In many cases, depending upon the policy terms, the insurer may have a duty to defend the entire claim, even if it includes non-covered allegations against the insured. However, the insurer is not obligated to identify the insured for a settlement, verdict or judgment based upon non-covered allegations—just to continue in the overall providing of legal defence.

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Directors & Officers (D&O) Liability Insurance What it covers: The policy provides protection to directors and officers of large companies against legal judgments and costs arising from unlawful acts, erroneous investment decisions, failure to maintain the property, releasing confidential information, hiring and firing decisions, conflicts of interest, gross negligence and various other errors. Coverage: There are three main types of directors and officer’s liability coverage: Coverage A, B, and C (detailed below). The minimum policy limits of liability are $1 million or even $5 million, which is used for defense expenses, expenses of a claim and damages, judgments and settlements expenses. The $1 million limit is per policy and is not shared among individual policies. Exclusions: Most D&O policies will exclude coverage for fraud or other criminal acts. A compromise is the "segregate clause" in many D&O policies, which provides coverage for the company and other innocent parties that might be dragged into a lawsuit due to criminal actions of another company director. Other typical exclusions are coverage for claims arising out of prior acts, punitive damages, and bodily injury or property damage. However, punitive damages may be covered as per the jurisdiction of the state in which the policy was issued.

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Casualty Insurance What is 'Casualty Insurance' Casualty insurance is a broad category of coverage against loss of property, damage or other liabilities. Casualty insurance includes vehicle insurance, liability insurance, theft insurance and elevator insurance.

Casualty Insurance and Business If you own a business, you should consider a few different types of casualty insurance, depending on what you do. There are policies available for cyber-fraud insurance, employee-theft and identity theft (to name a few). If you primarily do business online, check if your policies cover your website. If you depend on computers to run your business, you might want to insure the computers in a separate policy. Most business owners need to have casualty insurance coverage because, if you produce something, the possibility exists that it may end up harming someone. Even if you are a sole proprietor, it’s a good idea to carry insurance that is specific to your line of work. For example, if you’re a freelance auto mechanic who works from your own personal shop, you likely won’t need workers' compensation coverage, but you should have insurance that covers a situation in which a repair you made causes injury to a customer.

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1.3 Limitations of the Study

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2.1 Introduction of Bajaj Capital Limited “Market may change, but our promises don’t” Being one of India’s premier investment companies, Bajaj Capital Limited found their purpose in helping people protect and grow their wealth. Here Bajaj Capital Limited, offer personalized investment solution to individual investor, Non-Resident Indians (NRIs). and High Net worth clients, among others.

Over the last 53 years, Bajaj Capital Limited have secured more future and helped created more millionaires than other firm in India. But their true pride lies in the trust that their client shows in them. It is their deep personal relationship with each client that sets them apart.

Bajaj Capital is among the pioneers in investment services industry in India. For nearly five decades now, Bajaj Capital has been serving Indian investors realizing their aspirations by helping them create wealth and giving shape to the vision of its founder-chairman, Mr. K.K. Bajaj.

Bajaj Capital has contributed to the growth of the Indian Capital Market at every step. In 1965, Bajaj Capital were the first to innovate the Companies Fixed Deposit. Today, they are playing an active role in the growth of the Indian Mutual Fund industry.

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2.2 History of Bajaj Capital 

1964 Bajaj Capital sets up its first Investment Centre® in New Delhi to guide individual investors on where, when and how to invest India's first Mutual Fund, Unit Trust of India (UTI) was incorporated in the same year.

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1965 Bajaj Capital is incorporated as a Company. In the same year, the company introduces an innovative financial instrument – the Company Fixed Deposit. EIL Ltd. (Oberoi Hotels, then known as Associated Hotels of India Ltd.) becomes the first company to raise resources through Company Fixed Deposits.

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1966 Bajaj Capital expands its product range to include all UTI schemes and Government Saving Schemes in addition to Company Fixed Deposits.

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1969 Bajaj Capital manages its first Equity issue (through an associate company) of Grauer & Wells India Ltd.; right from drafting the prospectus to marketing the issue.

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1975 Bajaj Capital starts offering 'need-based' investment solutions to its clients, which today is popularly known as 'Financial Planning' in the investment world.

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1981 SAIL becomes the first Government Company to accept public deposits, followed by IOC, BHEL, BPCL, HPCL and others; thus, opening the floodgates for growth of retail investment market in India. Bajaj Capital plays an active role in all the schemes as 'Principal Brokers'

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1986 Public Sector Undertakings (PSUs) begin making public issues of bonds. MTNL, NHPC, IRFC offer a series of Bond Issues. Bajaj Capital is among the top ranks of resource mobilisers. 53

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1987 SBI leads the launch of Public Sector Mutual Funds in India. Bajaj Capital plays a significant role in fund mobilisation for all these players.

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1991 SBI issues India Development Bonds for NRIs. Bajaj Capital becomes the top mobiliser with collections of over US $20 million.

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1993 The first private sector Mutual Fund – Kothari Pioneer – is launched, followed by Birla and Alliance in the following years. Bajaj Capital plays an active role and is ranked among the top mobilisers for all their schemes.

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1995 IDBI and ICICI begin issuing their series of Bonds for retail investors. Bajaj Capital is the co-manager in all these offerings and consistently ranked among the top five mobilisers on an all-India basis.

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1997 Private sector players lead the revival of Mutual Funds in India through Open-ended Debt schemes. Bajaj Capital consolidates its position as India's largest retail distributor of Mutual Funds.

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1999 Bajaj Capital begins marketing Life and General Insurance products of LIC and GIC (through associate firms) in anticipation of opening up of the Insurance Sector. Bajaj Capital achieves the milestone of becoming the top 'Pension Scheme' seller in India and launches marketing of GIC's Health Insurance schemes.

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2000 Bajaj Capital implements its vision of being a 'One-stop Financial Supermarket.' The Company offered all kinds of financial products, through its Investment Centers. Bajaj Capital offers 'full-service merchant banking' including structuring, management and marketing of Capital issues. Bajaj Capital reinvents 'Financial Planning' in its international sense and upgrades its entire team of Investment Experts into Financial Planners. 54

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2002 The Company focuses on creating investor awareness for proper Financial Planning and need-based investing. To achieve this goal, the International College of Financial Planning, was set up to impart education in Financial Planning. The graduates of this institute become Certified Financial Planners (CFPs), a coveted professional qualification.

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2004 Bajaj Capital obtains the All India Insurance Broking Licence. Simultaneously, a series of wealth creation seminars are launched all over the country, making Bajaj Capital a household name.

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2005 Bajaj Capital launches its software-based programme aimed at encouraging scientific and holistic investing.

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2007 Bajaj Capital launches Stock Broking and Depository (Demat) Services (in one of its group company).

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2008 Bajaj Capital launches Just Trade®, an online Platform for investing in Equities, Mutual Funds, IPO's

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2.3 Why Bajaj Capital Limited?  Great choices Get an incredible range of financial products to choose from.  Hassle-free processes Timely updates, regular portfolio reviews and a 24x7 online call center support to keep you updated about investment.  Within easy reach 150 offices in India, so even if you relocate, they are right there with you.  SEBI licensed Category I Merchant Banker, ARN Holder, DP of NSDL.  Over 53 years of experience in helping people protect and grow their wealth.  Bajaj Capital Limited help in need analysis, scheme selection and efficient execution through our proprietary 360-degree financial assessment tool.  Bajaj Capital Limited offer an incredibly diverse range of financial products and personalized services.  Over 230 offices in 100 cities, to maintain a consistency of relationship and experience.  Strong team of qualified and experienced professionals including CA's, MBA's, MBE's, CFP's, CS's, Legal Experts, 700 Relationship Managers and others.  Six times winner of CNBC TV 18 Financial Advisor Award (Retail)  Bajaj Capital Group Company(ies) include, Bajaj Capital Insurance Broking Limited, is an IRDA-licensed Composite Insurance Broker; Just Trade Securities Limited, member of NSE and BSE; Bajaj Capital Investment Centre Limited, which facilitates realty solutions.  Serving over 10 lakh clients and managing assets worth Rs. 12,000 crores

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2.4 How Bajaj Capital Limited helps investors? Bajaj Capital Limited are the leading authority on personalized investment solutions in India. They offer need-based investment solution for all your dreams, be it: 

Retirement

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Wealth Creation

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Tax Saving

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Children’s Future

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Buying Property

2.5 How do Bajaj Capital Limited help you achieve your goals? Bajaj Capital Limited use their 360° Financial Assessment Tool, a unique scientific method which identifies the right product as per the customer financial goals in 3 easy steps:

1. Need Analysis: Identify your goals, preference and risk appetite.

2. Scheme Solution: Presenting you with a set of schemes that help you achieve the goals.

3. Efficient Execution: Being with customer every step of the way

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