With interest rates rising and economic uncertainties looming ahead, many investors are looking to restructure their portfolios to protect against potential losses. One way to do this is through securitised debt instruments (SDIs) like mortgage-backed securities and asset-backed securities. However, the terminology around these securities needs to be clarified for the average investor. In this article, we will break down some of the most common jargon and phrasal verbs around securitised debt so that you are well-versed with the concept of SDIs and can make informed decisions about what to hold onto or offload from your portfolio.
InvoiceX, an SDI product of Grip, is the first-ever credit-rated, diversified version of Invoice Discounting. InvoiceX brings a fresh concept to the Indian investment landscape - it allows individual investors to diversify into pools of short-term corporate debt by purchasing trade receivable-backed securities. This innovative instrument ticks many boxes for attractive features for investors earning risk-adjusted returns.
By opening up short-term corporate credit to individual investors, InvoiceX significantly expands the range of products available to gain fixed-income exposure. Investors can now look forward to regular interest payouts at pre-determined intervals while having their principal amount paid back closer to maturity. The diversified nature of InvoiceX helps spread out risk across various underlying corporate loans backed by invoices rather than concentrating exposure to a single borrower.
Importantly, InvoiceX carries the seal of approval and confidence inspired by RBI compliance and credit ratings from renowned agencies. The instrument adheres to RBI's framework for securitisation, affirming its regulatory standing. Furthermore, strong credit ratings by agencies like India Ratings validate the product's creditworthiness. This provides reassurance to investors on the product's soundness.
Oversight on InvoiceX comes from a SEBI-registered trustee, who monitors it for timely payments and flags potential delays or shortfalls. This prudent supervision layer acts as an ongoing safeguard of investors' interests. Additionally, with a security cover buffer of up to 20% of investment value, InvoiceX provides a cushion against possible defaults.
InvoiceX offers diversification in two ways - diversification from other assets in an investor's portfolio and diversification within InvoiceX. Overall, as India's first diversified, rated short-duration instrument, InvoiceX brings something novel to the table for investors looking to broaden their investment horizons.
Securitised debt instruments like asset-backed securities and mortgage-backed securities make up an important part of many investment portfolios. It is crucial for investors to understand the terminology and risks associated with these securities in order to make informed decisions. Investors who take the time to research and educate themselves about these instruments are better equipped to analyse their exposures and manage their portfolios accordingly.
When assessing securitised products, be sure to delve into the details of the offerings, including the underlying assets and cash flows. Try not to get bogged down in complex structuring, but pay attention to factors that could impact performance over time. Evaluate the risks diligently and determine if they align with your investment objectives.
If you decide to add securitised investments, start small to test the waters. Ease into positions slowly over time as you become more comfortable. Monitor your holdings closely to catch any signs of trouble before they become bigger issues. Be ready to pare back or unload positions that appear riskier than originally thought.
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Disclaimer - Investments in debt securities are subject to risks. Read all the offer-related documents carefully. The investor is requested to take into consideration all the risk factors before the commencement of trading. This communication is prepared by Grip Broking Private Limited (bearing SEBI Registration No. INZ000312836 and NSE ID 90319) and/or its affiliate/ group company(ies) (together referred to as “Grip”) and the contents of this disclaimer are applicable to this document and any and all written or oral communication(s) made by Grip or its directors, employees, associates, representatives and agents. This communication does not constitute advice relating to investing or otherwise dealing in securities and is not an offer or solicitation for the purchase or sale of any securities. Grip does not guarantee or assure any return on investments and accepts no liability for the consequences of any actions taken based on the information provided. For more details, please visit https://www.gripinvest.in/.
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