Offshore Bonds and Mutual Funds
What is the difference between Bonds and Mutual Funds?
In a Mutual Fund, you and other investors pool money and a fund manager invests that money in various asset classes such as stocks, bonds and cash equivalents. Both gains and losses are equally shared among all investors. Mutual Funds have the potential to offer good returns, but they are subject to market risks.
Bonds are fixed-income investment instruments that allows the government or companies to raise funds for business operations. When you purchase a bond, you are essentially lending money to a company. In return, you earn interest on the lent amount. The company will repay the entire amount along with interest on a future date.
What is a Bond Fund in Mutual Funds?
Bond Funds are a type of Debt Mutual Funds that are invested in Bonds. Ultra-short Duration Bond Funds and Dynamic Bond Funds are some common Bonds Funds. The former invests in Bonds with maturity less than a year. Dynamic Bond Funds are actively managed by increasing the fund’s maturity when the interest rates fall. Conversely, if the interest rates are rising, the fund manager may invest in bonds that offer reduced maturity.
What are Offshore Bonds and Mutual Funds?
Bonds and Mutual Funds issued by global entities are termed as Offshore Bonds and Mutual Funds With HDFC Bank's Gift City accounts, Resident & Non-Resident Indians can invest in such Offshore Bonds and Mutual Funds online through a common platform. You can invest in global bonds issued by banks, sovereigns and corporates. You can also invest in global Mutual Funds in various currencies. Additionally, you can also opt for custodial services for safekeeping your financial assets.
References:
https://www.amfiindia.com/investor-corner/knowledge-center/debt-fund.html#accordion7
https://rbi.org.in/Scripts/BS_ViewSavingBonds.aspx?Id=1116
