What is the definition of Capital Protection Fund?

Capital Protection fund is a type of hybrid fund. It is a closed-end fund so its main aim is to protect the capital of the investors even in case of a downturn in the markets by defining the scope for appreciation of the capital and participating in upturns of the market. The portfolio of these funds is bent towards debt especially zero coupon debt so the maturity is in alignment with the lock-in period of the fund. Latter insulate it from frictions arising from interest rate movements.  The debt part of the fund is so managed that returns increase to the level of initial capital investment.

Also, the new units of the scheme are available only during new fund offer (NFO) period. All sale and purchase of these units only happen on the exchange platform where the fund is listed.

These funds are thus a good option for low risk-taking investors and give them a chance to participate in equity market upturns.