Where to buy market-linked debentures in India?
Introduction Investing in bonds for risk-averse investors is a key strategy for meeting their needs.
However, the low-interest-rate environment, combined with the booming economy, has led investors to seek out more lucrative opportunities in the bond market. Market-linked debentures is one option that seeks to provide investors with a higher yield and is also tax-efficient. However, this alternative comes with higher risks. It is challenging to know the actual size of this industry. Estimates suggest that about Rs. 800–1000 crore worth of deals is done each month. If interest rates do not catch up, demand for this type of investment might continue growing.
What are market-linked debentures? Market-linked debentures(MLDs) are a type of debenture issued by a company, where the return of the debenture is linked to the performance of a specified financial market index, such as Sensex, Nifty or Government security yield. This instrument does not provide any fixed payment but provides a return on maturity. It also helps in getting exposure to the upsides in markets such as equity. The value of the MLD will fluctuate along with the benchmark index. If the benchmark index rises, the MLD will also rise in value. In contrast, if the benchmark index falls, the MLD will also fall in value. There are two types of MLDs: principal-protected and non-principal protected.
In principal-protected MLD, investors are guaranteed that they will get back their principal amount on maturity, even if the market index falls severely. To get further information about market-linked debentures, visit BondsIndia.
how to buy market linked debentures in India
How to invest in market-linked debentures in India? Individuals can buy market-linked debentures in India through these platforms: Check also- Which are the best bonds to invest in India , What are g-secs and how they are issued 1. Distributors or investment banks Individuals can buy market-linked debentures through distributors and investment banks. They are brokers who are authorised to sell these debentures in India. Individuals have to open a Trading and Demat account to participate in market-linked debentures. 2. Exchange Another way to invest in a market-linked debenture is through an exchange. However, only a few trades happen on the exchange, making it very illiquid. 3. Online Platforms The best option for an individual to buy a market-linked debenture is an online platform. Through online platforms, individuals can easily trade anywhere, anytime, without having to call the broker or a distributor. Numerous options are available to individuals in the case of online platforms. BondsIndia is one of the most trusted online bonds platforms that provide easy access to various bonds, extensive research, and a seamless process.
Conclusion Stocks and bonds have been the most common and traditional investment vehicles, but there are several alternatives available in the market. Another alternative that is gaining immense popularity among investors is marketlinked debentures. Market-linked debentures offer investors the opportunity to benefit from the rising prices and capital gains of stock markets, gold, etc. Moreover, MLDs are more tax-efficient than other types of bonds. They are dependent on the underlying market movement, and as such, there is no coupon payment. If these bonds are held for more than 1 year, they will be subject to longterm capital gains tax. However, each investor is advised to consider his or her circumstances before deciding whether to invest in these debentures.