Trigger facility can be an effective tool in financial planning. Yogita Loke explains what Triggers are and how they work
What is Trigger facility?
Triggers allows automatic switch on the happening of a pre-specified event. The investor can specify an event which may be related to time/value or a specific event in advance and when this event occurs, the trigger will get activated. This facility is a very useful tool in financial planning.
How does it work?
A Trigger will activate when the specified alert/event has reached your investor targeted value/ greater than particular value.
Example: Your investor purchases some units at Rs. 10. He wants to
redeem all his units when the NAV reaches Rs. 13. He has to keep track of the NAV daily and then send a redemption request.
Now, instead of keeping a track of the NAV every day, your investor can set a Trigger to redeem all units when the NAV is Rs 13 or more. Now the AMC will keep track on behalf of your investor and redeem his units for him on the day when the NAV reaches Rs 13 or more.
What are the different kinds of triggers available to the investor?
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When the value of investment reaches or crosses a particular value/certain percentage
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NAV reaches or crosses a particular value/ certain percentage
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A particular day or date
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Trigger based on Sensex/Nifty values
Which AMCs offer Trigger Facility?
AMCs providing this facility are Birla Sun life, Edelweiss, Fidelity, HDFC, ICICI Prudential, Tata, Principal, Reliance, IDFC, Religare, ING, LIC, Mire, Taurus, Quantum and UTI. However, this is available in select schemes only.