I am with a government organisation and want to invest surplus funds of approximately Rs 10 – 15 crore to earn returns greater than fixed deposits with least or no risk. Please advise this investment for 6 – 18 month.
-Vikas
Mutual funds are subject to market risk. Please read the offer documents carefully before investing. This is statutory warning that one can hear with mutual fund advertisements and something that most investors miss out reading when filling up offer documents. There is nothing called no risk when investing in mutual funds. The risks can be high or low, but mutual funds without risk do not exist. You should understand this at the onset before your investments in mutual funds.
As for your investments with low risk and the time frame that you suggest; you can explore fixed maturity plans. Fixed maturity plans are investment schemes floated by mutual funds and are close-ended with a maturity period ranging from three months to five years. These plans are predominantly debt-oriented, while some of them may have a small equity component. The objective of such a scheme is to generate steady returns over a fixed-maturity period and immunising the investor against market fluctuations. If you can split your investments over different time frames; say Rs 8 crore for 18 months, Rs 5 crore for 12 months, Rs 2 crore for six months; you can expect returns that are better than fixed deposits. Again, these are not options without risk. There is an element of risk which you should know of before investing in these.
This article was originally published on December 30, 2010.
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