We had launched our limited-period Debt Opportunity Portfolio (DOP) 10 days back, accessible at the link below: (https://bit.ly/TremendousOpportunity).
The aim of DOP is to take maximum advantage of the current high rates of interest in the market which give us all a great opportunity to:-
- Lock in the current high rates of interest in high-quality and safe investments like Govt bonds, bank FD equivalents and corporate FDs.
- Be unaffected by the interest rate cuts which are likely to start approximately 6-10 months from now.
And and added Bonanza : there’s an even more powerful deal clincher called the ‘Mark-To-Market’ (MTM) advantage in DOP!
This ‘deal clincher’ is peculiar to debt mutual funds and not available elsewhere due to the manner in which debt MFs work! Let’s see how…
What is this Mark-To-Market (MTM) phenomenon?
DOP will have various categories of bonds in the portfolio held through the ‘envelope’ of carefully-selected debt MFs.
Let us now say that the interest rates fall down from the current ballpark figure of 7% to 6% after about One year from now. The newly issued bonds available in the market at that time would therefore be offering a 6% interest rate (called the Coupon Rate in case of bonds).
The 7% interest bonds issued earlier (which would be part of our portfolio) and available in the market for sale-purchase, will then start commanding a premium due to giving 16.66% more rate of interest (7% Vs 6%) than the new bonds being issued giving 6% rate of interest then. The price of these earlier-issued bonds then increases in the market and our Debt MFs holding these bonds will see their NAV (Net Asset Value) rise, thus giving even more rate of return to the holders of those debt MFs while not compromising anywhere on the safety part at all.
Can we calculate the likely price of such bonds if the interest rates fall down from 7% to 6%?
There’s an (obnoxious-looking 🙄 ) formula, called the Bond Pricing formula, that can calculate it:
Bond Price = [(Coupon Payment / Yield) x (1 – 1/(1 + Yield)^n)] + [Face Value / (1 + Yield)^n]
We’ll not bore you with the calculations but suffice it to say that a 10-year bond giving 7% interest today with a face value of Rs 1000 will be selling in the market at about Rs 1121.96 if interest rates fall down to 6%. This is equivalent to adding about 2% per year of more returns to the already high rates which can be currently locked in.
If interest rates fall down further, more bonanza.
Thus, DOP will not only lock in current rates, give you high safety, high-quality investments but also keep giving you better and better returns as interest rates fall down later due to the Mark-To-Market (MTM) phenomenon, compared to traditional safe avenues like bank FDs, Corporate FDs, Senior Citizens Savings Scheme (SCSS), Post Office Monthly Income Scheme (PO MIS) and the likes.
This is the B-I-G safe opportunity available in the market today
Check out the video Our CEO, Col Sanjeev Govila (retd), explains about the safe investment opportunity available in financial market here
So how do you go ahead?
Please feel free to reach out to your financial planner in the company if you are an existing investor, or contact us at email@example.com or give us a call at 9999 838 923 during working hours if you are yet not invested through us.
Please note that the minimum investment in this opportunity will be Rs 5 Lakhs and further in multiples of Rs 1 Lakh.