ILTS vs direct equity

ILTS (index long-term strategy) has lower risk (4%) due to diversification and hedging, while direct equity has higher risk (100%) from investing in individual stocks. ILTS and direct equity both offer unlimited returns, but ILTS tracks an index while direct equity depends on individual stock performance. ILTS has a CAGR of 18% and no lock-in period, while direct equity has a CAGR of 14% and typically no lock-in period. Taxation and potential charges differ between the two. The choice depends on risk appetite, diversification preference, and investment goals. Consider risk tolerance and strategy before deciding. Let's delve into the details of the comparison between index long-term strategy, ILTS, and direct equity across various aspects. Risk Index long-term strategy carries a lower risk, rated at 4%. This is attributed to its diversified portfolio, spreading investments across various stocks within an index and the hedging through options. While it is not entirely risk-free, the risk is significantly lower compared to individual stocks. Direct equity, on the other hand, is associated with a higher risk, rated at 100%. Investing directly in individual stocks exposes investors to the specific risks of those companies, including market volatility, industry challenges, and company-specific factors. ILTS offers unlimited potential returns. As it tracks an entire index, it captures the overall market movement, providing the opportunity for substantial returns over the long term. Similar to ILTS, direct equity also offers unlimited returns. However, the returns are contingent on the performance of individual stocks selected by the investor. CAGR – Compound Annual Growth Rate ILTS boasts a CAGR of 18%, reflecting its historical performance in delivering compounded annual growth over the long term. Direct equity, specifically tracking an index, has a CAGR of 14%. The returns are influenced by the collective performance of the stocks included in the chosen index. Lock-in Period ILTS comes with the advantage of no lock-in period. Investors have the flexibility to buy and sell their holdings at any time, allowing for liquidity and ease of portfolio management. Similar to ILTS, direct equity typically has no lock-in period. Investors can enter or exit their positions based on their investment strategy and market conditions. Taxation Taxation in ILTS primarily involves both long-term capital gains and business income. Gains are subject to tax based on holding periods and prevailing tax regulations. Taxation in direct equity is also in the form of long-term capital gains. The tax treatment is applied to the profit generated from the sale of equity shares held for a specified period. ILTS typically does not have entry or exit loads. Investors can enter or exit the investment without incurring additional charges, providing flexibility. In direct equity while there is generally no entry load, direct equity may have exit loads, especially if the investor exits within a specified period. This cost should be considered when evaluating overall returns. In summary, the choice between index long-term strategy and direct equity depends on the investor's risk appetite, preference for diversification, and investment goals. ILTS offers a more diversified and relatively lower risk approach, while direct equity allows for individual stock selection and potentially higher returns but comes with higher risk. Investors should carefully consider their risk tolerance and investment strategy before making a decision. For more information visit www.fema.gov For more information visit www.fema.gov For more information visit www.fema.gov For more information visit www.fema.gov For more information visit www.fema.gov For more information visit www.fema.gov For more information visit www.fema.gov For more information visit www.fema.gov For more information visit www.fema.gov For more information visit www.fema.gov