Market-Linked Products

Market-linked notes are financial products that tie your returns to the performance of underlying assets like market indices, stocks, commodities, or interest rates. They are structured to offer the potential for market gains while providing some level of principal protection.

Here are some examples of market-linked products.

• Unit-linked insurance Plans (ULIPs) are life insurance plans that also offer the benefit of market-linked returns. You need to pay a premium for the cover, just like in the case of other life insurance plans. However, in addition to this, you can also choose to invest in equity funds, debt funds or hybrid funds. The returns you get from these funds depend on the performance of the markets.

• Equity mutual funds are simply MFs that invest in a set portfolio of equity stocks. Based on the kind of stocks they invest in, equity mutual funds can be classified into different categories, such as large-cap funds, mid-cap funds, small-cap funds and multi-cap funds. There are also sectoral funds that invest in stocks of companies belonging to specific sectors.

• National Pension System (NPS) The NPS is an often-overlooked market-linked product. It is a government-backed scheme that helps investors with varying risk appetites secure their post-retirement life. By investing in NPS, you can choose to allocate your capital to debt or equity assets. These assets offer returns based on how the respective markets perform.