Sundaram Capital Protection Oriented Fund Review

 

Sundaram Capital Protection Oriented Fund Review

Let us review Sundaram Capital Protection Fund today. First of all let us understand that what is capital protection fund and how it works?

Well, in Layman’s language, a capital protection fund is one whose main goal is to protect your capital anyhow. So they make sure that at the end of the tenure (Yes, these are the close ended funds), you get at least your invested amount back.

So How they achieve this goal? I mean how actually these funds protect your wealth?

Well, it’ simple. By investing 70-90% of your corpus into the debt papers (Bonds, Corporate debt, Commercial Papers, Debentures & Other debt papers) and rest (10-30%) in equity.

So now, let’s talk about Sundaram Capital Protection oriented fund. Well, this fund invests 80% of your money in high quality debt papers and 20% in equity. So that even if the equity performs bad, at the end of tenure, you will get back your initially invested amount.

In other words, Capital protection oriented funds are the kind of Hybrid Funds which invests both in equity and debt.

So Should you Invest in Sundaram Capital Protection Oriented Fund?

NO. The straight forward answer is NO. This is because everybody in India already invest in PPF, Bank FDs, Savings accounts, Government Bonds (GOI) and Post-office savings schemes. Most of the people of India already invest lots of money in fixed income instruments than what is the need of such kind of funds which again invest your money in debt?

I mean if you don’t invest in any of the above fixed income instruments than definitely go for this fund. Otherwise, it doesn’t make any sense to go for this fund.

Remember, when you invest in above debt products, you are already investing in debt so there is no point of investing more and more money in Hybrid mutual funds like this. After all, inflation is still there which will erode the purchasing power of your wealth parked these Capital Protection Funds…!!!