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Market Linked Debentures can look simple at first — but their returns depend on how the product is structured. Before considering one, it is important to understand what you are investing in, what can influence your return, and what risks you are taking.
A Market Linked Debenture, commonly called an MLD, is a debt instrument whose return is linked, fully or partly, to the performance of a specified market-linked underlying or to predefined conditions.
Unlike a conventional fixed-return instrument, the amount an investor eventually receives can depend not only on the issuer, but also on the conditions built into the MLD.
Many investors are familiar with fixed deposits, mutual funds, equities and conventional bonds. MLDs introduce another type of payoff structure.
That can make them relevant to conversations about portfolio construction and diversification — but it also makes understanding the structure especially important.
An MLD that sounds attractive at first glance may behave quite differently under different market scenarios.
We'll try to take the jargon out of MLDs and work through the subject from an investor's point of view.
What exactly is an MLD, who issues one, and how is it different from a conventional bond or fixed-return investment?
Understand how an index, market movement or predefined condition can influence the eventual payout.
We'll use illustrative situations to understand how an MLD may behave when market conditions change.
Credit risk, liquidity, market-linked conditions and other important aspects that shouldn't be overlooked.
Explore their potential role within the broader discussion around asset allocation and portfolio diversification.
Understand what to examine about the issuer, payoff, maturity, liquidity and other product conditions.
This webinar may be useful if you already invest in products such as mutual funds, equities, fixed deposits or bonds and want to understand another investment structure without getting lost in financial jargon.
You don't need prior knowledge of MLDs. We'll start with the basics.
Not simply whether an MLD is “good” or “bad”.
The objective is that by the end of the session you should be able to look at an MLD and know what questions to ask before making a decision.
Structured investments can appear complicated because of the terminology surrounding them. Once the structure is broken down, however, it becomes easier to understand what is actually being offered.
Join us on 2nd September for an educational discussion on Market Linked Debentures.
Market Scenario and Investment Opportunities
