Your Queries: Mutual Funds -Balanced funds, hybrid funds can switch between equity & debt

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March 24, 2020 3:20 AM

Gold ETFs investors can exit only by selling to secondary market participants on the stock exchange.

Your Queries, Mutual Funds, Balanced funds, hybrid funds, Gold ETFs investors, stock exchange, Sovereign Gold BondsPre-mature redemption is permitted only after the fifth year, on coupon payment dates.

Is there any MF scheme where the money automatically moves to equity when the markets rise and move to debt for sometime when markets fall?
—Animesh Joshi

‘Dynamic Asset Allocation / Balanced Advantage funds’ allow a fund manager the flexibility to move between equity and fixed income based on their perception of market valuations. Most schemes in this category have the flexibility to maintain equity exposure in the range of 65 to 100% in equities (rest in fixed-income), while a few schemes have the flexibility to move out entirely from equities into fixed-income. ‘Hybrid funds’ is another class of funds which can take asset allocation calls based on their valuation expectations. However, the equity exposure in such funds is restricted to a much narrower range relative to dynamic asset allocation funds. The equity allocation range for these funds varies: For Aggressive Hybrids– 65-80%, Balanced Hybrids– 40 to 60%, Conservative Hybrids– 10 to 15%.

Why is there an exit option in gold ETFs but not in Sovereign Gold Bond?
—Jitendra Kumar

Gold ETFs investors can exit only by selling to secondary market participants on the stock exchange. Only large institutions and authorised participants can directly purchase/sell units to the AMC as the minimum lot size to transact with the AMC directly is high. Sovereign Gold Bonds (SGB) have a maturity period of eight years from the date of issue of the bonds. Pre-mature redemption is permitted only after the fifth year, on coupon payment dates. SGB can be traded with secondary market participants on stock exchange platforms, if held in demat form. Hence, an investor can exit by selling his units anytime on the exchange.

My father invested in mutual funds. Can my mother continue with the investment as he is no longer alive?
—Arun K

No, your mother cannot hold the investment in your father’s name. If your mother was designated as the nominee by your father, to claim the units she would need to complete the necessary formalities for transmitting the units in favour of the nominee. She may then hold the investments in her name and may invest further. In case no nomination was made, the units would be transmitted to the account of legal heir(s).

The writer is director, Investment Advisory, Morningstar Investment Adviser (India). Send your queries to fepersonal finance@expressindia.com

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