Reliance Nivesh Lakshya Fund

Image credit: www.reliancemutual.com

Bank FD (Fixed Deposit) interest rates over the past few years are falling down. NPAs (Non-performing Assets) have raised questions marks on ratings of banks in India. Looking at the falling interest rate scenario, it is not wise to invest in bank fixed deposit, NSC and PPF as they are prone to change in interest rate. And not only bank fixed deposits, many financial advisors are advising their clients not to invest in GILT funds.

A look at falling interest rates

When countries become developed economies from emerging economies through rapid development, their levels of inflation and interest rates tend to come down as shown in the table below.

Country	10 Year Yield
Country	2000	2018	Drop in Yield
US	6.50%	3%	-54%
S. Korea	8%	2.70%	-66%
Germany	5.50%	0.55%	-90%
China	7.50%	3.80%	-49%
India	11%	7.80%	-29%

A look at how wealth is eroded due to falling interest rates

Alternative to Fixed Deposit

Many HNIs (High Net Worth Individuals) hold some portion of their wealth in fixed-income instruments. As the fixed deposit is losing its charm, the options available to them are becoming less and less attractive. There needs to be a viable, trustworthy investment option where a good interest rate can be guaranteed over a long period of time. Reliance Nivesh Lakshya Fund is one such alternative for investors.

Reliance Nivesh Lakshya Fund is an open-ended debt scheme recently launched by Reliance Mutual Fund. The fund aims to capture the prevailing interest rate for the long-termand shield investors against falling interest rates. In order to achieve this, this debt fund will primarily invest in long-term fixed income securities, predominantly Government securities, at current yields. The NFO of the scheme is currently open for subscription and closes on July 2, 2018. In this post, let’s take a look at Reliance Nivesh Lakshya Fund.

Key Features of Reliance Nivesh lakshya Fund

1. An opportunity to secure prevailing interest rates for the long term.

2. Long-terminvestment horizon up to 25-30 years.

3. No lock-in period, you can withdraw anytime.

4. Tax efficient due to indexation benefit, applicable after three years.

5. Investment in fixed income securities including Government Securities.

6. Regular cash flows via Systematic Withdrawal Plan (SWP).

Long-TermFinancial Goals in India

Some common long-termfinancial goals among Indian investors are:

1. Tension-free retired life

2. Good education for children

3. Marriage of children

4. Leaving an estate for the children and/or the grandchildren.

5. Accumulation of a certain corpus in the long term.

A vast majority of people have not planned for their long-term goals, while a lot of them remain invested in suboptimal assets.

Suitability of Reliance Nivesh Lakshya Fund

Reliance Nivesh Lakshya Fund is suitable for the following investors.

1. HNIs (High net worth individuals)

This debt fund is best suitable for HNIs who want to preserve their wealth by locking in a good interest rate for 25-30 yearsthrough government securities.

2. Parents and Grandparents

This fund is also suitable for parents and grandparents who want to create a legacy for their children / grandchildren by locking in good interest rates for 25-30 years horizon.

3. Retirees

This fund is also suitable for retirees who want to secure a good interest rate for their long-term income generation needs as the fund allows regular cash flows via SWP.

Why you invest in Reliance Nivesh Lakshya Fund?

1. To secure the currently prevailing interest rates for long term.

2. Insulation from credit risk.

3. Tax efficient due to indexation benefit, applicable after 3 years.

4. Opportunity to invest for long-term with the flexibility to withdraw anytime.

5. Regular cash flows through Systematic Withdrawal Plan.

Reliance Nivesh Lakshya Fund is a good scheme for investors who want to preserve their wealth by locking in a good interest rate for 25-30 years through government securities.

Also read: What are mutual funds | Benefits of investing in mutual funds

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Monday, 2 July 2018