Suppose you are looking forward to achieving short-term returns from your investment; the ideal avenue to invest is in the debt category, where you can receive commendable returns from your portfolio even in three to six months. If you are willing to grow your money in the short term, you can consider the debt category from where you will receive returns slightly higher than the Fixed Deposits in a bank.

The debt category is generally placed at a higher position above the liquid funds in the pyramid of low risk as they provide relatively higher returns within a short span of time. These funds usually follow a good blend of duration and accrual strategies for maximizing returns. Thus, it is a meaningful investment avenue for investors who want to keep some money aside for a short duration of a few months.

ETFs or Exchange Traded Funds are usually purchased and sold none other than on the stock exchanges. So, apart from the TER, Exchange Traded Funds also charge some amount of brokerage on these transactions. The overall cost, however, depends on the pattern in which the brokerage is specifically structured. You will need to pay the charges for the Demat account, as this is necessary to initiate trading in the ETF. Some brokers usually waive off these charges for the Demat account for active traders. If ETF is not liquid, then certain impact costs are also levied. The impact cost is the difference between the price you want to trade & the executed price. This difference generally exists when the ETF has low traded volumes.

Mutual funds are one amongst the preferred avenues for PMS Managers to park their cash components presently. The data from SEBI shows that the Portfolio Management Service companies have recently more than doubled their reported allocations to the mutual funds in the last two years. The figures state that the allocation has grown from Rs 10,668 crores in the month of June 2020 to Rs. 24,537 crores in the month of June 2022.

Experts reveal that the liquid funds & other short-term mutual funds are becoming a preferred parking ground for several PMS Managers to store their liquid assets. Many PMS Managers are seen to invest in the different equity funds that include ETFs and offer certain convenient & efficient ways for deploying assets at a very low cost.

Momentum investment follows an opposite approach from the prevailing buy-low and sell-high canon. This is majorly based on the concept of investing in those stocks that are already doing well and are expected to perform well even in the near future. So, momentum investing is all about investing in high-performing stocks until it slows down eventually.

Momentum investing has been very profitable in recent years and generated much higher returns than broader indices. The outperformance of the momentum funds has been witnessed to be very significant.

You must remember that momentum funds are high-performing and yield higher profits, but they are still unproven and new. If you are a conservative saver, you should ideally give this particular category a miss and restrict your investments only to large-cap Flexi-cap and index funds. If you have an appetite for handling volatility, you can try the momentum funds.

Does anyone familiar with the investment and stock market understand a listed company? How can you invest in unlisted companies? But have you come across the term unlisted stocks or unlisted companies? There are so many eminent start-ups happening in India every year. Seeing the mammoth funding rounds or astronomical valuations, would you also like to invest in unlisted companies such as OYO, LAVA, or CSK today? Wondering how? Continue reading on! 

Ways to Invest in Unlisted Companies - 

There are primarily five ways by which you can invest in the unlisted companies- 

1. Investing through third-party and start-ups that facilitate unlisted investing

Various start-ups presently offer the facility to invest in unlisted companies. These third parties assist in forming a connection between buyers and sellers with the unlisted companies to meet their particular needs. The minimum funds needed to invest in unlisted companies generally ranges from 10,000 to 50,000. 

2. Buying ESOPs from existing employees

An investor can speak to the staff having ESPOs. They can process the investment through brokers/intermediaries and privately sell the shares. This procedure needs a lot of negotiation as the public share value of the firm remains inaccessible. In this method, the transaction is directly performed between the seller and the buyer. 

3. Buying directly form Promoters

Buying directly from promoters is also referred to as private placement. In this method, the supporters do the personal selling of shares. Also, many third parties are involved in the private sale process, like wealth managers, banks, investments, etc. 

4. Alternative Investment Funds (AIF) & Portfolio Management Services (PMS) 

This mechanism is similar to the mutual fund investment process for the listed company. In this process, the investors invest in alternative investment funds and portfolio management services, supporting unlisted firms. The only difference is the decision-making power concerning investment and who will perform the transactions lies in the hands of the investment manager. This means the investor will not have direct control over the decision. 

5. Purchasing through angel funds or direct funding platform 

This form of investment requires meagre investment, that is, on the firm and its financial condition. 

Benefits of buying the Unlisted Shares 

While you plan to invest in the unlisted companies, do read some of its benefits to ensure you are taking the right decision- 

• High-value investment: As the shares are not that liquid, they are often undervalued, overvalued or undervalued for long periods. Therefore, the investors can easily invest in the undervalued claims and get a good return on investment. 
• Diversification of risk: The shares of the unlisted company are a unique class asset by themselves, because of which they have diversified risk of investment. 
• Peace of mind: The share prices of the unlisted companies are mostly stable, which eases the investors' worries concerning price fluctuation. 
• High growth investments: Generally, unlisted companies are smaller in size, because of which investing in them increases the chances of high growth returns. 

Conclusion 

Henceforth, these are the ways or mechanisms by which you can invest in unlisted companies and leverage their associated benefits, such as high-value investment, diversification of risk, peace of mind, and high-growth investments.