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Karan Mehra, CEO of Amplio Invest spoke about the opportunities and potential of fixed income products in the Indian mutual fund market at the recently concluded Cafemutual Ideas Fest 2025 at Hotel Sahara Star, Mumbai.
Karan noted that equity markets have underperformed over the past two quarters. Moreover, GDP growth forecasts have been revised down to 6.5% from an earlier estimate of 7%.
In such a scenario, Karan claimed that invoice discounting offers an interesting business opportunity for MFDs.
Why should you recommend fixed income strategy?
Karan believes the credit gap in the MSME sector will drive the growth of the fixed income market, as MSMEs are the backbone of India’s GDP growth.
Why look at invoice discounting?
Karan highlighted that MSMEs often face challenges like inadequate working capital and liquidity constraints. This makes it difficult for them to secure formal financing through traditional banks.
What is invoice discounting?
Invoice discounting is the process of exchanging trade receivables for upfront cash at a discount. Simply put, it's a form of short-term lending where expected cash flows act as collateral.
In this model, investors help MSMEs manage their 90-day working capital cycles—while also earning potentially attractive returns.
Things to keep in mind
When investing in invoice discounting, the focus should be on evaluating risk first and returns later.
Investors are also advised to choose products that are insured against unforeseen or disruptive events to safeguard their capital.
How much to invest in invoice discounting?
Karan pointed out that wealthy investors are seeking innovation and fresh ideas—they are moving away from traditional investment products.
He shared a simple formula for fixed income allocation: Invest '100 – age of the investor' in fixed income products.
Benefits of invoice discounting
- They offer a fresh and innovative approach with a long-term perspective
- The market is well-regulated by SEBI and RBI, ensuring investor safety
- They have the potential to deliver double-digit returns
Watch the complete session by clicking here.
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To know more about Cafemutual Passives Conference 2025, visit www.cafemutualevents.com.
