The Benefits of Investing in Liquid ETFs for Traders
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| Liquid ETFs offer attractive returns and allow traders to seamlessly trade without the need for constant transfers of money between bank accounts and broking accounts. These ETFs invest in debt instruments that mature overnight and provide returns in line with money market interest rates. They also carry no credit risk and no duration risk, making them a low-risk investment option. Additionally, investing in liquid ETFs saves traders on operational costs and time, allowing them to focus on identifying new trades in the markets. Some fund houses that offer liquid ETFs include Aditya Birla Sun Life, DSP, HDFC, ICICI Prudential, Kotak, Mirae, and Nippon India. Overall, investing in liquid ETFs provides peace of mind and optimizes returns for traders. |
Investing in Emerging Trends and Industries
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| Thematic funds are mutual funds that focus on specific themes or sectors, capitalizing on emerging trends and industries. These funds carry a high risk, so investors must carefully assess their risk appetite. Thematic funds can be part of a satellite portfolio for long-term investors who can tolerate volatility. When investing in thematic funds, investors should look for themes with long-term growth potential and understand the fund’s strategy. Thematic funds are suitable for investors with a strong conviction about a particular sector’s growth potential. |
RBI Increases Risk Weight on Unsecured Lending, Resulting in Higher Interest Rates on Personal Loans
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| The Reserve Bank of India has increased the risk weight on unsecured lending, leading to higher interest rates on unsecured personal loans. Borrowers with a credit score below 750 will face steeper hikes. Lenders may reduce the supply of unsecured loans and allocate more capital to cover these loans. Banks with a higher percentage of unsecured advances may take a cautious approach. Online lending apps may increase interest rates to maintain profitability. Borrowers should stay informed about any changes and regularly review their financial situation. Individuals with scores of 750 or higher will receive the best credit card and loan offers. |
Interest Rate Hikes Over as Central Banks Pause
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| Major economies such as the US, Euro zone, UK, China, and India have paused interest rate hikes and are now expected to cut rates next year. The US is likely to see rate cuts after July 2024, while the timing for other countries is uncertain. Central banks are considering the practicalities of higher interest rates, especially with the burden of debt. China has been cutting rates due to growth challenges and issues in the financial and real estate sectors. Lower interest rates benefit investment assets such as equity and fixed income. The primary driver for rate decisions is inflation. |
Money Market Funds Attract Conservative Investors for Short-Term Investments
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| Money market funds are becoming increasingly popular among conservative investors looking for better yields with minimal risk. These funds offer safety, liquidity, and stable returns, making them an attractive option for individuals seeking short-term investment opportunities. In October, money market funds received significant net inflows, indicating their growing appeal. These funds allow investors to maintain liquidity in the short term while strategically allocating their funds to long-term investments as market conditions evolve. Money market funds offer flexibility by investing in instruments with maturities of up to one year, providing a versatile solution that can adjust its duration dynamically based on market conditions. Investors prefer money market funds because of their high-quality underlying debt papers and slightly better returns compared to other short-term investment options. Overall, money market funds provide a safe and lucrative avenue for short-term investments. |
