21%: The long-duration debt funds category has returned 20.81 per cent returns over the past one year.
- There are, however, only two funds in the category. Reliance Nivesh Lakshya Fund has a one-year return of 23.68 per cent, and ICICI Prudential Long Term Bond Fund has 18.35 per cent.
- These are returns of regular schemes, which have agent commissions.
- Bond prices are inversely proportionate to interest rates. As interest rates are declining, bond prices are on the rise.
- According to the Securities and Exchange Board of India (Sebi)'s guidelines, long-duration debt funds have to keep an average portfolio maturity of over seven years.
- Funds that have a higher portfolio maturity are also more volatile. Investors should avoid them entirely unless they have an advisor who understands interest rate movement and can suggest when to enter and exit these schemes.
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A few links for further reading
Invest and emigrate
The great Indian dream of settling abroad is achievable if one has a few crores to invest. Rich nations offer a variety of investment options in a quid pro quo arrangement: immigrants get a better quality of life and revenue from them helps these countries’ finances. Wealthy Indians, troubled by polluted cities and the red tape holding up entrepreneurship, may want a quick ticket out of the country. Sanjay Kumar Singh lists a range of options: from a Canadian province’s investor programme to America’s US EB-5 plan.
Small savings schemes
Investors in small savings schemes breathed a sigh of relief when the government announced on October 1 that interest rates on these instruments would not be revised for the fourth quarter of the calendar year. With the economy witnessing a slowdown, and the stock markets also turning volatile, many investors are looking for alternative avenues to park their savings. Small savings schemes, with their sovereign guarantee, have emerged as a viable alternative.
NUMBER OF THE WEEK
Rs 10,000: Enhanced withdrawal limit allowed by RBI to customers of PMC Bank.