Non-Convertible debentures ? | RR Finance

In the world of investments, diversification is the cornerstone of prudent investing, and allocating a portion of your portfolio to debt is a key strategy in achieving this balance. Debt instruments like Nonconvertible debentures (NCDs) offer stability and fixed income, which can balance out the volatility in equity or other market-based instruments. The debt allocation can cushion your portfolio during rough patches in the markets and help you build a more stable and resilient portfolio while keeping risk in check.

Understanding Nonconvertible Debentures(NCDs)

Nonconvertible debentures, or NCDs in short, are the best way to have exposure to debt. Nonconvertible Debentures are used by companies to raise money. NCDs typically offer higher returns which appeals to investors looking for fixed returns with low levels of risk.

Investors buy NCDs with a fixed face value, and until maturity, they receive regular interest payments, for example semi-annually or annually. When the debt matures, the issuing company pays the investor back the principal amount, fulfilling the debt commitment.

Read our full blog about Non-Convertible Debentures.

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