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Background

Corporate Clients wanting to invest

Investment Time Horizon of 9-12 months

Looking to improve their yields

Observations
  • The Reserve Bank of India had reduced the interest rates in 2020 in response to the Covid-19 pandemic.
  • The yield on Liquid Funds, Ultra Short Funds, and Low Duration Funds were just between 4.5% to 5%.
  • Investing in such funds is recommended only when the time horizon is between 12 to 18 months.
Results
 Proper Asset Allocation

Yields rose with the markets

Every time the market went up, the yields were higher. And when the markets were down, the downside was limited compared to other investment products.

 Proper Asset Allocation

Comparatively Higher Returns

The returns on their investments ranged between 8% to 9%, compared to traditional fixed income investments, which yielded hardly 5%

 Proper Asset Allocation

Tax exemption benefits

The dividends paid by Equity Savings Funds are taxed as per the income tax rate of the investor. Plus, long term capital gains upto 1 lakh are exempt from taxation.