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Closed Ended Mutual Fund vs. Open Ended Mutual Funds vs ETF

Open-Ended Mutual Funds:

Open ended mutual funds are mutual funds where your investments are not subjected to any lock-in. They are liquid and can be redeemed any time. They may be subjected to an exit load depending on which category they belong to. These types of mutual funds may or may not be listed on the exchange. They are more popular among the investors as compared to closed ended mutual funds.

Closed-ended Mutual Fund:

As the name suggests, closed-ended mutual funds are funds that are subjected to a lock-in period or a fixed maturity period.. Closed-ended funds can be bought or sold real-time just like any additional stock on an exchange. However, one key difference between closed-ended mutual fund vs. open-ended mutual fund is that in Closed-ended Fund once you invest, you cannot redeem your money back unless the lock-in period is over.. The lock-in negates the possibility of an impulsive decision during times of unstable market conditions. A steady AUM helps fund managers to take prudent investment decisions. Closed-ended mutual fundsare mandatorily required to be listed on the exchange but you can invest without a DEMAT account too.

Investors with a long-term investment horizon who do not need the invested money during that horizon can look at investing in closed-ended funds.

ETFs:

Exchange-traded funds are investment vehicles that invest in a basket of securities. These funds are open-ended. You can buy and sell them on the markets just like stocks. They are not available over-the-counter which means you will need a DEMAT account to invest in them. ETFs mirror or replicate the performance of a particular index.

ETFs are managed passively & actively. ETFs generally have lower expense ratios than those charged by actively managed funds.

Investing in more than one ETF could lead to duplication or over-diversification. An ETF tracking the NIFTY 50 and an ETF that tracks technology or IT companies may have many overlaps if the underlying stocks are common.

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Orally Dissolving Pharmaceutical Drugs – The Future of 2021

Orally Dissolving Pharmaceutical Drugs

December 1, 2019 – a day that will be remembered in history when Corona (COVID-19) was first identified.

It is nearing the end of 2020 and we are still working on successful clinical trials of any drug or vaccine for COVID-19. Experts have claimed that the vaccine might require a year or two to be successfully formulated and administered to the global population at large.

This situation brings with itself a bigger problem – that of administering the vaccine.

As we are already aware, COVID-19 is extremely contagious and can be easily transferred from one person to another through surface contact, it makes sense to be skeptical of the current existing modes of drug administration, almost all of which require some sort of surface contact with a non-organic material (syringes, droppers, etc.).

How should we tackle this simple, yet unavoidable, dilemma?

The answer might not have been that simple a decade ago, but today we indeed have a seamless solution for this problem – Oral Thin Films.

Oral Thin Films (OTFs) are polymeric films designed to deliver therapeutic elements into the oral cavity or the gastrointestinal (GI) tract, where they are absorbed and routed to the circulatory system directly. As such, OTFs can rapidly deliver hydrophilic as well as hydrophobic active compounds.

Types of OTF

There are two types of Oral Thin Films:

OROMUCOSAL

This type of thin film is characterised by its ability to stick to the oral cavity while slowly releasing the drug into the patient’s systemic circulation. The medication enters the patient’s bloodstream directly and can thus be transported to the target organ faster.

ORODISPERSIBLE

In contrast to the previous type, this type of film is characterised by its instant breakdown immediately upon coming into contact with the patient’s saliva. These can be further sub-classified into two types: Orally Disintegrating & Orally Dissolving.

Orally Disintegrating disintegrate in the mouth upon contact with saliva, then dissolve and get absorbed in the gastro-intestinal tract (a method highly effective to transport hydrophobic drug compounds that would otherwise be very difficult to be dissolved and absorbed into the body through other conventional methods).

Orally Dissolving disintegrate and dissolve simultaneously into the saliva (more appropriate for water-soluble compounds that are easier to be absorbed into the body).

Some More Benefits of Using Orally Dissolving Pharmaceutical Drugs

1. Precision

Since the films can be directly absorbed through one of the methods described above, it makes it easier to have a precise dose that can be altered depending upon the target patient. For example, in the case of dealing with children, who need a smaller dosage compared to adults, the same film can be altered to a lower dosage.

2. Easier Manufacturing

These films are developed using powderless and aqueous-based processes that do not use solvents. This not only helps in accelerating the manufacturing process but also makes the process seamless, ultimately saving on time and cost.

3. Customization

The drug delivery system through OTFs is an ideal option for patients as they do not need to chew, swallow, or use water to ingest the drug. Furthermore, the films are highly customisable and can have flavors and colors added to them to make them more palatable.

Following the above-mentioned discussion, one can only appreciate the effectiveness, ease of manufacture, and customisability of this relatively new method of drug administration. Oral Thin Films are expected to ensure a seamless, more efficient, and hassle-free future in medication.

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What are the types of debt mutual funds and their risk classification?

What are the types of debt mutual funds and their risk classification?

Types of Debt funds, Debt funds, types of debt funds, dynamic bond funds, liquid funds

Debt funds are a type of actively managed mutual fund that primarily invests in debt instruments such as Treasury bills (T-bills), Government securities (G-secs), commercial papers (CP), government and corporate bonds, certificates of deposit (CD), and money market instruments.

What are the different types of debt funds in India?

Liquid Funds:
This type of debt fund is considered relatively less risky among mutual funds. As the name suggests, they are liquid and allow investors to redeem and liquidate their investments depending on their needs. The portfolio of this fund comprises instruments that have a short maturity period of not exceeding 91 days.

Dynamic Bond Funds:
Dynamic Bond Fund is where the fund manager dynamically changes the maturity of the portfolio depending upon the interest rate forecast. If the forecast indicates a rising interest rate, then the fund manager may opt for instruments with a longer maturity. If the forecast is indicating a falling interest rate, then the fund manager opt for investments in instruments with a shorter duration of maturity.

Short / Medium / Long Term Debt Funds:
Short-term Funds are a type of debt fund that generally have a maturity period of 1 to 3 years. The portfolio of short-term funds is structured in a way such that their prices are not much impacted by the interest rate movements.

Medium Term debt funds generally have a maturity period of up to 3 to 5 years, and long-term debt funds have a maturity exceeding 5 years. The longer the tenure, the more significant is the impact of the interest rate on the portfolio, which is also known as interest rate risk or duration risk.

Fixed Maturity Plans
This type of debt mutual fund is a closed-ended scheme. However, they can be traded on the stock exchange where they are listed.

Investment in debt mutual funds are generally less volatile than equity mutual funds. However, there are different types of risks in debt funds.

AMFI has very well-articulated the risks present in Debt Securities. Let us take a brief look at the risks prevalent in the debt market instruments.

Interest Rate Risk

The NAV or Net Asset Value of Debt Mutual Funds is inversely related to interest rate movement. Generally, when the interest rates rise, the prices of existing fixed income securities in your debt mutual fund portfolio fall and when interest rates drop, such prices increase. Accordingly, the NAV of the debt mutual fund portfolio may fall if the market interest rate rises and may increase when the market interest rate comes down. The extent of fall or rise in the prices depends upon the duration or maturity of the underlying security.

Credit Risk

Credit risk refers to the risk associated with default on interest and /or principal amounts by issuers of fixed income securities. The credit rating agencies assign a credit rating to fixed income securities and accordingly, in case of a default, the debt mutual fund may not fully receive the amount due to them and the NAV of the scheme may fall to the extent of default. The price of a security may change with expected changes in the credit rating of the issuer, even when there is no default. It may be mentioned here corporate bonds may carry a relatively higher amount of credit risk than government securities. Within corporate bonds too there are different levels of safety.

Liquidity Risk

Liquidity risk refers to the ease of selling debt instruments at or near their valuation yield-to-maturity (YTM) or true value. Liquidity condition in the market varies from time to time and accordingly, the liquidity of a bond may change, depending on market conditions

Assess the illiquidity of the underlying securities of the debt mutual fund portfolio. At the time of selling the security, the security may become illiquid, thereby leading to a loss in the value of the portfolio.

Debt funds are suitable for investors having a lower appetite for risk. Be cognizant of the underlying risk in the portfolio before you invest.

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