Dynamic bond funds have flexibility to change duration as and when needed

Prakash Kumar

There are specific mutual fund schemes that aim at building a pension corpus for investors. A pension mutual fund is a debt-oriented mutual fund in which the investments are locked-in till the investor attains retirement. The fund gives tax benefit under Section 80C. Mutual funds do not offer any pension or annuity. The returns at the time of maturity are market-linked. However,they depend on the cumulative returns over the holding period and not on the movement in the maturity year alone. Apart from this,you can also adopt the systematic investment plan route in well-managed balanced funds to build your pension corpus for retirement.

For long-term returns,is it better to buy gold exchange-traded fund (ETFs) rather than gold coins?

Umashankar Prasad

Gold ETFs are a good investment option if you want to take an exposure in gold. In fact,ETF is a mutual fund,which is traded on an exchange,just like any other stock. To invest in a gold ETF,you need to have a demat account. However,if you do not wish to open a demat account,you can invest in gold savings funds,which are fund-of-funds and invest in a particular gold ETF. But unlike ETFs,these funds are not listed.

How do I invest in dynamic bond funds and how do they work for long-term returns?

Surender Prabhu

A dynamic bond fund enjoys the flexibility to change the duration of the bond as and when needed. Interest rates and bond prices are inversely related. When the interest rate is rising,bond prices fall and the fund manager can decrease the duration of the bond as short-term bonds face a lower impact. And when the interest rate is falling,they can increase the duration of the bond. They dynamically move from a fully invested situation to a fully cash position and various stages in between,depending on the fund manager’s reading of the interest rate situation. These funds take advantage of rate cuts or hikes by altering their portfolios. Thus,regardless of the interest rate scenario,investing in a well-managed dynamic bond fund usually makes sense.

Can I take a loan by pledging mutual fund units and how much loan can I avail?

Gopal Sathe

One can pledge the mutual fund units as security to financiers like banks and financial institutions and borrow. To do so,a lien has to be marked against the units. Lien refers to the right of the financier to take and hold or sell the property/asset of a debtor as security or payment for a debt. The amount of loan would depend on the terms of the lending institution and the nature of mutual fund units.

The writer is CEO,Investshoppe.com

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