Investing in the debt market is a dynamic activity that often requires analyzing various investment options and placing orders individually. Choosing the right bonds is a task that involves researching the issuers, credit quality, financial stability, etc. which takes up a lot of time for investors. To simplify this, we at TheFixedIncome have launched Bond Baskets.
Simplifying with Bond Basket
A bond basket is a collection of multiple bonds structured into a single investment product with a similar theme or specific criteria.
The bond basket allows investors to buy various bonds with a click and build a robust portfolio, helping you diversify your investment portfolio and reduce risk. Investors can create and grow a customized, diversified portfolio to generate long-term wealth while managing and mitigating risk more effectively, all with a single click.
The baskets are pre-built after well research saving time and reducing risk, making basket investing an efficient and effective investment strategy.
Benefits of investing in Bond Basket
- Diversification: Diversification is the primary aim of bond baskets, enabling investors to access a diversified portfolio of different bonds within a single product. It helps in spreading risks, thereby enhancing the overall stability of the investment and streamlining the management process.
- Risk Management: Bond baskets comprise multiple bonds into a structured financial product that delivers favorable returns and also mitigates risk. Investors can use them as effective tools for managing risk and hedging against interest rate or credit risks by selecting baskets that align with their risk management goals.
- Returns: The performance of a bond basket includes interest income, and is contingent upon the performance of its underlying bonds. The overall return represents a weighted average of the returns generated by the bonds in a basket.
- Income Generation: Bond baskets serve as a source of regular income through regular coupon payments, particularly to investors focused on generating consistent and stable income.
- Simplified Investing: Instead of researching and buying individual bonds, investors can get exposure to a diversified bond portfolio through one transaction. Save time and effort by purchasing a bond basket.
- Category-focused: Investors have the option of selecting baskets according to their preferences i.e. they can choose specific sectors and types of bonds.
How to Invest in a Bond Basket?
- Visit https://www.thefixedincome.com/
- Click on the Basket section.
3. Suppose you want to invest in high-yielding secured bonds. Now, there are two options- if you click on Invest Now, the basket will be added directly to your cart but if you click on Know More you will see the details of the bonds within the basket.
4. Once you click on Know More, you can view the investment value, basket yield, basket benefit, and basket maturity. You can choose the amount of investment by clicking on investment value.
5. Clicking on individual bonds will display their indicative cash flow.
6. Once you click on Invest Now, you will get to view your order summary.
7. Then select Account Member. The member’s default bank account and Demat account will be taken.
8. Once done, tick on terms and conditions and privacy policy and click on Place Order.
9. To view the status of your order, click on Order Details.
Conclusion
Summing up, bond baskets provide investors with an approach to diversify their portfolios while managing risks and maximizing returns. It saves time and reduces risk by including multiple bonds into a single investment product, providing exposure to a variety of bonds, and catering to specific investment goals.
However, there are also some challenges associated with the bond basket. Hence, it’s crucial for investors to carefully assess factors such as liquidity, issuer creditworthiness, etc. when considering bond baskets as part of their investment strategy. Overall, bond baskets represent a versatile tool for navigating the complexities of the financial markets and achieving long-term investment objectives.
Disclaimer: Investments in debt securities/ municipal debt securities/securitized debt instruments are subject to risks including delay and/ or default in payment. Read all the offer-related documents carefully.
FAQs
1. What is a bond basket?
Ans: A bond basket is a collection of multiple bonds grouped into a single investment product, allowing investors to invest through a single transaction, thereby providing higher returns.
2. How does investing in a bond basket differ from buying individual bonds?
Ans: In a bond basket, you can invest in a variety of bonds in one investment, enhancing diversification and simplifying portfolio management; it also saves time. Whereas buying individual bonds is a separate transaction.
3. What risks are associated with a bond basket?
Ans: The risks associated with a bond basket include market fluctuations, credit risk, issuer risk, liquidity risk, and interest rate risk, which can influence the performance of the bond basket.
4. After investing in the bond basket, can I sell an individual bond from the basket in the secondary market?
Ans: Yes, you can sell individual bonds in the secondary market after investing in the basket.
