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MLD

Market-Linked Debentures

Diversify your investment portfolio by considering Market-Linked Debentures (MLDs), which blend the features of fixed-income instruments with the opportunity for increased returns tied to equity market performance. These structured investment products strike a balance between risk and reward, enabling you to potentially benefit from market gains while receiving regular coupon payments, providing an added layer of security.

Market linked debentures (MLD)


Types of market linked debentures (MLD)

What are Market-Linked Debentures?

Market-Linked Debentures (MLDs) are hybrid investment options issued in the form of bonds. The returns or interest received on MLDs are dependent on the performance of the underlying market, such as the Nifty 50 Index or Nifty 100 Index.

  • Higher potential returns

  • Flexibility and customization

  • Diversification and risk management

Types of Market-Linked Debentures

While specific types of MLDs are not mentioned in the provided information, market-linked debentures can have various structures and underlying assets.

Advantages of Market-Linked Debentures (MLD’s)

  • Downside protection

    Principal protected MLDs offer investors the benefit of downside protection, as they guarantee the return of the initial investment amount at maturity.

  • Potential for higher returns

    Non-principal protected MLDs provide the potential for higher returns compared to traditional fixed-income investments.

  • Diversification

    This helps spread risk and reduce exposure to any single investment, potentially improving the overall risk-return profile of the investment portfolio.

  • Customization

    Investors can choose from a variety of MLD structures, such as those with principal protection, currency exposures, or tailored coupon payments based on specific conditions.

Comparison of Returns and risks for various products like MLDs, equity, Bonds, Bank FD

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How Market-Linked Debentures work?

  • In India, a company named ABC Ltd. issues MLDs to investors, with a maturity period of 5 years and a principal investment amount of ₹1,00,000 per MLD.

  • The MLDs are linked to the performance of the Nifty 50 Index, which represents the top 50 companies listed on the National Stock Exchange (NSE) in India.

  • The MLDs offer 100% principal protection, ensuring that at maturity, investors will receive back their initial investment amount of ₹1,00,000, irrespective of how the market performs.

  • Along with principal protection, the MLDs offer potential upside based on the performance of the Nifty 50 Index.

  • If the Nifty 50 Index performs well over the 5-year period, investors may receive additional returns on top of their principal investment. For example, if the index returns 12% annually, the investor would receive a total return of ₹1,60,090 (₹1,00,000 principal + ₹60,090 returns).

  • If the Nifty 50 Index performs well over the 5-year period, investors may receive additional returns on top of their principal investment. For example, if the index returns 12% annually, the investor would receive a total return of ₹1,60,090 (₹1,00,000 principal + ₹60,090 returns).

  • If the Nifty 50 Index performs well over the 5-year period, investors may receive additional returns on top of their principal investment. For example, if the index returns 12% annually, the investor would receive a total return of ₹1,60,090 (₹1,00,000 principal + ₹60,090 returns).

  • If the Nifty 50 Index performs well over the 5-year period, investors may receive additional returns on top of their principal investment. For example, if the index returns 12% annually, the investor would receive a total return of ₹1,60,090 (₹1,00,000 principal + ₹60,090 returns).

Frequently Asked Questions

What are market-linked debentures?

How do market-linked debentures work?

What are the risks associated with market-linked debentures?

Who should consider investing in market-linked debentures?

Insights about the market.

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