Investors should ascertain objectives and risk tolerance. There are many investment options that place money in assets or businesses with the aim of earning profits, such as unlisted bonds and credit funds.
So, what are unlisted bonds?
Unlisted bonds are debt securities that are not listed on any recognized stock exchange. These bonds are traded over-the-counter (OTC), which means a broker or middleman is involved in the transaction. They can be easily bought and sold with the help of market makers, as they are not traded on an exchange.
These are not issued to the public at large and are generally invested in by large institutional or private investors. Their interest rates are generally fixed and may be more volatile to market risks.
features
Higher yield: These generally offer higher yields than listed bonds, making them attractive to income investors.
Diversification: Including unlisted bonds in your portfolio can help diversify exposure across different asset types and sectors.
tax benefits: Some unlisted bonds provide particularly favorable tax treatment on interest income.
Potential Devaluation: Due to their illiquidity, unlisted bonds often have fewer investors willing to hold them for extended periods. As a result, these stocks may become cheaper due to less competition.
And, what is a private credit fund?
Private debt refers to capital that private funds lend to businesses through direct loans or structured finance arrangements. It holds a unique position in the credit market and its demand is also increasing.
They provide funding to borrowers who are not able to access traditional bank finance. These investments are less affected by market fluctuations and often have floating interest rates.
Read this also What is a private loan and how does it differ from traditional forms of financing
features
Diversification: These funds operate on a variety of credit instruments such as senior secured loans and distressed loans, which offer higher yields than other types of investments.
Low Market Risk: They are less affected by market fluctuations or economic recessions because they are not publicly traded.
Higher yield: These funds offer higher returns than other traditional investment options.
resilience: Private credit funds offer the advantage of flexibility in financing. Under these, loan structures are tailored to suit the needs of the borrowers.
a short time: They also offer shorter term returns than traditional fixed income products.
Attract capital inflows: The expansion of private credit funds in India has drawn significant capital from domestic and international investors looking for higher risk-adjusted returns. As more investors gain confidence, they can attract more capital, allowing them to support a wider range of enterprises.
Read this also Five Common Myths About Private and Traditional Loans You Should Know
(edited by : Anshul,
first published: January 23, 2025 at 7:35 pm First
(TagstoTranslate)Business(T)Private Credit Fund(T)Unlisted Bond(T)Investment(T)Profit Investing
