We cannot remove interest rate risk by investing in gilt funds, we remove the credit risk, and on the contrary if the gilt funds hold long term gsecs, the interest rate risk remains for extended periods of time, thereby giving negative returns too.
I think there used to be gilt funds which held 1 year maturity gsecs, but they don’t exist anymore, I think we have long term gescs now.
Forgot to say something. When you purchase a bond with FV = 100 for 103, you stand to lose the capital of Rs3 at the end of tenue
If you purchase 10000 qty of 754GS2036 at 103 ie 10 lakh qty, you would need to pay 10.3 lakh and after tenure you will get back only 10 lakh. Rs3 * 10000 qty is loss in capital
Govt will pay only face value of bond. that is 100. The reason it is trading at 103 could be bond is issued at high interest rate and now due to lowering of interest rate current yield is reduced so automatically face value will change as interest rate remains same as the level at issue time.
Suppose if bonds issued at face value 100 at 8 % interest. Govt will pay 8% interest and pay 100 back with face value at expiry. So if interest rates fall then face value will increase so new buyer gets same interest rate. But if current yield is 7 then face value will increase to compensate.
Did you get any order confirmation from Coin on Thursday? When did the funds get deducted from the account? @ShubhS9 I placed an order today, and post 8pm cutoff time, can’t see my order anywhere on the app. Nor has the amount been deducted/blocked. A confirmation mail at least should go out.
@KarthikAcharya Can the margin obtained by pledging Cash Equivalents securities be utilized towards commodities Long and short futures? If yes then how do I choose whether I require the margin towards commodity A/c or equity If no any plans to bring this?