Securities Products — Equity, Debt, Derivatives, MFs
Securities products span four broad buckets: EQUITY (shares that represent ownership), DEBT (bonds and debentures that represent a loan), DERIVATIVES (contracts...
Four Product Families
Securities products span four broad buckets: EQUITY (shares that represent ownership), DEBT (bonds and debentures that represent a loan), DERIVATIVES (contracts whose value derives from an underlying), and POOLED PRODUCTS (mutual funds, ETFs, AIFs, REITs). Each has its own risk/return profile, regulatory framework and settlement cycle.
Equity shares represent fractional ownership — shareholders have voting rights and claim on residual profits. Preference shares sit between equity and debt — fixed dividend but no voting. Debt instruments (bonds, debentures, commercial paper, T-bills) are loans to the issuer with fixed coupons and face value. Derivatives (futures, options, swaps) derive value from an underlying. Pooled products — mutual funds, ETFs, AIFs, REITs, InvITs — aggregate investor money for professional management. Within IFSC (GIFT City), equity shares of foreign companies, currency derivatives and interest-rate derivatives trade in foreign currency; shares of Indian companies are NOT allowed.
You own a fractional slice of the company
You're the lender; issuer owes you principal + interest
No direct ownership — you're speculating on price movement
Pooled investment managed by professionals
A Practical Example
Priya's portfolio:
• 100 Reliance shares (EQUITY) — she owns 100/(~14 Bn) of RIL
• ₹10 Lakh in G-Sec 7.26% 2034 (DEBT) — govt owes her coupons every 6 months
• 5 Nifty call options (DERIVATIVE) — bet on Nifty rising
• ₹15 Lakh in HDFC Flexicap Fund (MF) — HDFC AMC manages it
• 50 units of Embassy REIT (REIT) — she owns a slice of commercial real estate
Each bucket has different taxation (LTCG for equity, accrual taxation for debt, business income for F&O, capital gains for MF units, hybrid for REIT) and different settlement rules.
What Makes This Important
Frequently Asked Questions
Functionally similar — both are debt instruments. Legally in India: "bond" typically refers to government or PSU debt, while "debenture" refers to corporate debt. Debentures can be secured or unsecured; government bonds are sovereign-guaranteed.
🧠 Quick Quiz
2 questions to check your understanding