Mutual Fund: What is an assured return scheme?

There are some mutual funds that promise an assured return to its share holders irrespective of performance of the scheme, these funds are know as Assure Return Scheme.

It is mandatory that the sponsor or AMC should provide guarantee of assured return and same should be disclosed in the offer document as well. As an investor, you should carefully read the offer document and pay attention to scheme period.Some schemes assure returns once in a year and they review and change it at the beginning of the next year.
While reading the offer document, always ensure the status of ‘put’ option in the document. Some funds keep it to themselves and some allow the unit holder to retain it. You can avoid the risk and use mutual fund selling put options through the assured returns schemes.
If you are one of those investors who do not wish to engage in day to day market dynamics but want fixed amount of returns annually, you should opt for assured return scheme option. But the amount of returns depends on the market dynamics and inflation rate.
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