Jhankrish Website THE WORLD OF FINANCIAL INDEPENDENCE

Top-up Return

Underlying return: It is a cumulative return generated by
(a) capital appreciation of underlying asset
(b) interest
(c) dividend.
Top-up return: It is an additional return generated through underlying asset with the use of derivative segment. As we know underlying return is directly related to market risk, top-up return helps to balance the fluctuations of underlying return.

It provides stability to portfolio return by balancing the fluctuations of underlying return which is directly related to market risk.

As it adds up on underlying return, it creates cumulative compounding at faster pace.

Apart from income generated through dividend & interest, this income is counted as “Business Income” that acts as a source of passive income.

Whenever underlying asset do not perform and/or give negative return, top-up return hedges the loss of underlying assets.