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Closing a Deal

Exchange-Traded Funds

Exchange - Traded Funds (ETFs)

The Exchange Traded Funds work as open-ended funds that are generally traded on exchange (BSE / NSE). They are benchmarked against stock exchange index. The funds traded on NSE are usually benchmarked against Nifty. Benchmark Nifty BeES works as an example of ETF that links to stocks in Nifty. While in index fund the units are normally traded at a day’s NAV, with Exchange Traded Funds the price always keeps on changing throughout the trading hours for the exchange. So, if you are an investor, who is looking to buy / sell in ETF units, it is something that you can achieve by placing the orders with a broker who can offer 2-way quote in real time at all stages. AMC does not provide with the sale and the re-purchase options for the units. ETFs today are available easily for the pre-specified indices. Here at Shree Investment, we can also provide with Gold ETFs. The Silver ETFs are still not available.

Fund of Funds (FOF):

The Fund of Funds usually invests money in various other funds of same or other mutual fund house/s. On the other hand, they are not technically allowed to invest with any other FOF. They are also not allowed to invest assets in schemes other than mutual fund funds and schemes, except in cases where the fund needs liquidity for meeting its redemption requirements. Such parameters are usually disclosed in offer document of a FOF scheme.

Fixed Maturity Plan (FMP):

The Fixed Maturity Plans are funds that work as income/debt schemes such as Debentures, Bonds and the Money market instruments. These funds offer fixed return in a span of time. The FMPs often work like the close ended schemes that remain open for only a definite period at the time of the initial offer. Nevertheless, unlike the closed ended schemes in which your money gets locked for some particular period, the FMPs offer you a chance to exit. This is however subject to exit load based on the funds regulations. The FMPs can offer you an opportunity to quickly liquidate funds by selling all your units at prevailing price right on the exchange. The FMPs are generally launched as a series and have different maturity profiles. Maturity period may vary anywhere between 3 months and 1 year.

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