The tax advantage that vanished

MLDs are hybrid instruments — non-convertible debentures whose final payout is tied to the performance of a market benchmark, such as the Nifty 50, Sensex, gold, or a government-bond yield, rather than to a fixed coupon. Some are “principal-protected,” guaranteeing the return of capital regardless of how the benchmark performs; others put the principal itself at risk.

Until 2023, the appeal was mostly fiscal. MLDs held for more than 12 months qualified for long-term capital gains tax at a flat 10%, well below the slab rates applied to interest income from ordinary bonds or fixed deposits. That made them a favourite of high-net-worth individuals (HNIs) looking to dress up equity-like returns as tax-efficient debt.

The Finance Act 2023 ended this. A new provision, Section 50AA, reclassified all MLD gains as short-term capital gains, taxable at the investor’s slab rate — as high as 30% plus surcharge for top earners — irrespective of how long the instrument is held. There was no grandfathering: even MLDs purchased before the change became subject to the new rules on transfer or maturity. A parallel change removed the withholding-tax exemption that listed debentures had previously enjoyed, adding a compliance layer that had not existed before.

By any measure, this was the single biggest reason to buy an MLD. Its removal should, in theory, have killed the product.

Why interest has held up regardless

It hasn’t, for a few reasons.

Access got easier. The minimum investment ticket was cut from ₹10 lakh to ₹1 lakh in January 2023, opening the product to a much larger pool of retail and mass-affluent investors just as the tax advantage disappeared.

The structure still does something bonds, deposits and funds don’t. A principal-protected MLD offers a floor — investors get their capital back even if the linked index falls — while still capturing part of the upside if it rises. That combination doesn’t exist in a fixed deposit (fixed return, no upside) or a mutual fund (no floor). For an investor who wants to bank gains from a volatile equity portfolio without immediately re-risking that capital, MLDs offer a place to park money that still tracks the market to some degree.

The wealth-management industry has repositioned the product. Indian private banks and wealth managers entering 2026 describe a broader shift away from selling individual products on tax merit and toward asset-allocation-led advice, in which structured products, private credit and alternatives all compete for a place in the portfolio on the basis of diversification and risk-adjusted return, not tax arbitrage. MLDs have been folded into that reframing: issuers and distributors now emphasise their low correlation to plain-vanilla debt and equity, rather than their tax treatment, which stopped being a selling point three years ago.

The trade-off is legible enough: MLDs offer a shot at equity-like returns with a partial safety net, in exchange for poor liquidity, higher complexity, and — since 2023 — no tax edge over the alternatives.

A tool for volatile markets, not a core holding

The clearest use case for MLDs today is tactical rather than strategic. When equity markets turn choppy, some investors sell part of their holdings and route the proceeds into a principal-protected MLD rather than into cash or a fixed deposit. The MLD then behaves as a kind of holding pen: capital is protected if the market falls further, but the investor retains some participation if it recovers before the debenture matures — at which point the money can be redeployed into equities, often at more attractive levels if markets have indeed corrected.

This is consistent with the broader direction of Indian wealth management going into 2026, where advisers describe a growing preference for portfolios that are resilient rather than aggressively positioned, after a period in which Indian equities underperformed global peers even as gold and silver rallied. Structured products, including MLDs, are increasingly discussed in the same breath as private credit and alternative investment funds — as instruments for managing volatility and dispersion, not as tax shelters.

What investors get wrong

A few misconceptions persist, often because they linger from the pre-2023 era:

• “MLDs are tax-efficient.” They no longer are. All gains are taxed as short-term capital gains at slab rate, with no benefit for a longer holding period and no indexation.

• “Principal-protected means risk-free.” The protection is only as good as the issuer. MLDs are unsecured claims on the company that issues them — if it defaults, the “protection” is worth nothing.

• “MLDs behave like fixed deposits.” They don’t offer an assured return; what comes back at maturity depends entirely on the pre-set payout formula and how the benchmark has performed.

• “Being listed makes them liquid.” Listing does not guarantee a ready buyer. Secondary-market trading in MLDs is typically thin, and early exit can mean selling at a significant discount, if a buyer can be found at all.

The risks worth weighing

Before investing, four risks deserve particular scrutiny:

1. Credit risk. MLDs are debt claims on the issuer, often a non-banking financial company. Investors should stay within their comfort zone on credit rating — AAA or AA-rated issuers for lower risk tolerance — since a default can wipe out the “protected” principal along with any expected return.

2. Liquidity risk. These instruments are built to be held to maturity. Investors who may need the capital early should treat MLDs as illiquid.

3. Payoff complexity. Caps, participation rates and barriers embedded in the payout formula can materially limit upside even when the underlying benchmark performs well. The offer document, not the marketing pitch, tells the real story.

4. Regulatory risk. The 2023 change is a reminder that tax treatment is not fixed. Rules can shift, and — as happened then — can apply retroactively to instruments already held.

Who should — and shouldn’t — hold them

MLDs are best suited to HNIs and sophisticated investors with a long investment horizon, the risk appetite to accept possible principal loss in non-protected structures, and the patience to hold to maturity. They can also serve first-time or more conservative investors through principal-protected structures, provided they invest with proper guidance given the complexity of the payout terms.

They are poorly suited to investors who may need liquidity before maturity, those in lower tax brackets where slab-rate taxation erodes much of the return advantage, or anyone unwilling or unable to evaluate issuer credit quality and payoff mechanics closely.

Where MLDs fit from here

Commentary from India’s private wealth industry heading into 2026 points to structured products, MLDs included, becoming a more settled — if still niche — feature of diversified HNI and UHNI portfolios, alongside private credit, alternative investment funds and offshore allocations. Their future growth looks tied less to tax advantages, which are gone, and more to product innovation — a widening range of underlying benchmarks, more customisable payoff structures — and to whether the industry can make the instruments accessible without obscuring their complexity and illiquidity from newer investors.

The investment case for MLDs, in short, has not so much strengthened as changed shape: from a tax trade dressed up as diversification, to a genuine — if still niche — diversification tool that happens to carry no tax advantage at all.

Sources

1. Vinod Kothari Consultants — “Shorn of tax benefit, MLDs now face tax deduction on payouts” — https://vinodkothari.com/2023/05/shorn-of-tax-benefit-mlds-now-face-tax-deduction-on-payouts/

2. Grip Invest — “Taxation of Market-linked Debentures (MLDs) in India” — https://www.gripinvest.in/blog/tax-implications-of-market-linked-debentures

3. InCred — “MLDs: Advantages and disadvantages” — https://www.incredpremier.com/blogs-details/mlds-types-features-and-benefits

4. PL Capital — “Market Linked Debentures – Invest in MLD Online in India” — https://www.plindia.com/market-linked-debentures/

5. Dezerv — “Market Linked Debentures – Find the list of all MLDs in India” — https://www.dezerv.in/bonds/mld-market-linked-debentures/

6. Anand Rathi PCG (ARPCG) — “Taxation on Market-Linked Debentures in India” — https://www.anandrathipcg.com/blogs/taxation-on-mlds

7. EquityUnlisted — “Market-Linked Debentures (MLDs) 2025 | Smart Fixed-Income Investment” — https://equityunlisted.com/market-linked-debentures-mlds/

8. Jiraaf — “Are Market Linked Debentures Worth It? MLDs Meaning, Tax & Returns” — https://www.jiraaf.com/blogs/personal-finance/market-linked-debentures-mlds

9. Meta Investment — “Earn More Than Traditional Fixed Income with Market-Linked Debentures” — https://metainvestment.in/2024/05/03/mld/

10. Meta Investment — “Market-Linked Debentures (MLDs)” — https://metainvestment.in/income/mld/

11. Tata Capital — “Market Linked Debentures (MLDs): Types, risks & taxation” — https://www.tatacapital.com/blog/wealth-services/understanding-market-linked-debentures/

12. Taxmann — “Market-Linked Debentures Investment – Impact of Finance Act 2023” — https://www.taxmann.com/post/blog/market-linked-debentures-investment-impact-of-finance-act/

13. Hubbis — “India 2026: Portfolio Discipline, Global Diversification And Advisory Depth In A Maturing Wealth Market” (Aditya Birla) — https://www.hubbis.com/article/india-2026-portfolio-discipline-global-diversification-and-advisory-depth-in-a-maturing-wealth-market

14. Hubbis — “From Product to Portfolio Solutions: Building Resilient Wealth Strategies for India’s Next Phase” (Motilal Oswal Private Wealth) — https://www.hubbis.com/article/from-product-to-portfolio-solutions-building-resilient-wealth-strategies-for-india-s-next-phase

15. Hubbis — “Nuvama Private’s Onkarpreet Singh Jutla on Global Diversification, Alternatives and Risk-Calibrated Growth for India 2026” — https://www.hubbis.com/article/nuvama-private-s-onkarpreet-singh-jutla-on-global-diversification-alternatives-and-risk-calibrated-growth-for-india-2026

16. Hubbis — “The Diversification of HNW and UHNW Portfolios in India” (Motilal Oswal AMC) — https://www.hubbis.com/article/the-diversification-of-hnw-and-uhnw-portfolios-in-india-views-from-a-leading-local-asset-management-expert

17. Hubbis — “Global Diversification Comes of Age: Building Cross-Border Investment Capability for Indian Wealth” — https://www.hubbis.com/article/global-diversification-comes-of-age-building-cross-border-investment-capability-for-indian-wealth

18. Hubbis — “India’s Asset & Wealth Management Crossroads: Incentives, Innovation and the Next Phase of Advisory Evolution” — https://hubbis.com/article/india-s-asset-wealth-management-crossroads-incentives-innovation-and-the-next-phase-of-advisory-evolution

19. Financier Worldwide — “The great portfolio rebalancing: a shift in diversification” — https://www.financierworldwide.com/the-great-portfolio-rebalancing-a-shift-in-diversification

20. IRJAEM — “Structural Transformation In India’s Wealth Management Industry: Trends, Growth Drivers, And Emerging Challenges” — https://goldncloudpublications.com/index.php/irjaem/article/view/1422

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Some of the report’s evidence is hard to dismiss. The correlation between American shares and the Bloomberg US Aggregate Bond index, just 0.13 over the past 25 years, has risen to 0.66 since 2022, undermining the basic logic of stock-bond diversification. Index overlap is real, too: the S&P 500, the Nasdaq Composite and the MSCI World index now share nearly identical top holdings, meaning an investor who holds all three may simply be tripling a bet on a handful of technology giants. And the report’s point about passive drift is well made: years of strong equity returns have nudged many 60/40 portfolios towards 77/23 without anyone deciding to take on more risk.

The valuation argument is plausible but more contestable. Apollo notes that the equity risk premium, though near its long-run average, sits well below its 20-year norm, and that credit spreads are near multi-decade tights. Fair enough -- but “spreads are tight” has been a refrain among credit strategists for several years now, with limited predictive power for when, or whether, they widen. Readers should treat this as a description of current pricing, not a forecast.

What the report does not dwell on is the cost of its own prescription. Private markets are illiquid by design; investors give up daily pricing and ready access to capital in exchange for an illiquidity premium that is not guaranteed. Fees are typically higher than for public funds. And manager selection, which Apollo itself highlights as critical -- citing a 30-percentage-point gap between top- and bottom-decile private-equity managers, against just two points in public equities -- is a double-edged argument. It implies that getting it wrong in private markets is far costlier than getting it wrong in an index fund, not merely that getting it right pays more.

There is also an obvious point worth stating plainly: this is marketing literature from a firm whose revenue depends on growing private-markets allocations, not independent research. The data points are real and mostly verifiable, but the framing -- nine “takeaways,” a confident tone about timing being favourable now -- serves Apollo’s commercial interest as much as the reader’s.

None of which makes the underlying diagnosis wrong. Diversification within public markets probably has weakened, and many portfolios likely have drifted further into equities than their owners realise. The sensible response is to take the data seriously while treating the prescription -- more private markets, ideally through Apollo -- with the scepticism due any pitch from the firm offering the cure.

For nearly three years, global FinTech operated under a cloud of suspended expectations. IPO markets froze, venture funding collapsed from pandemic-era highs, and private valuations endured a prolonged correction. Yet beneath that apparent slowdown, the industry continued to scale at extraordinary speed.

That contradiction now matters.

According to a recent report by FT Partners and Blue Dot Investors, the world’s 100 largest private FinTech companies are collectively valued at roughly $1.9 trillion and generate an estimated $174 billion in annual revenue, more than comparable public FinTech peers. The significance is not merely the size of the ecosystem, but its maturity. FinTech is no longer an emerging venture category waiting to prove itself. Much of it already operates at infrastructure scale while remaining trapped inside private markets.

The result is a growing imbalance between company maturity and available liquidity.

More than 20,000 FinTech firms founded before 2017 remain private without a major liquidity event, according to the report. Many were built during the mobile-and-cloud expansion of the 2010s, accelerated during the pandemic liquidity boom, and then encountered a radically different capital-market environment after interest rates surged globally.

Initially, this appeared cyclical. Higher rates compressed technology multiples, investors prioritised profitability over growth, and IPO activity stalled. But the deeper issue is structural: the FinTech industry has outgrown the venture-capital model that financed its rise.

Companies such as Stripe, Revolut and Kraken are no longer startup experiments. They increasingly resemble mature financial platforms with global distribution, embedded infrastructure and substantial revenue bases. Yet they continue to operate outside public-market structures.

That creates mounting pressure across the ecosystem. Venture funds need distributions. Employees want liquidity. Early investors seek exits. Founders require capital flexibility. As these pressures accumulate simultaneously, a new phase of capital-market activity appears increasingly inevitable.

The reopening of the IPO market in 2025 offers an early signal of this transition. But the new IPO environment looks fundamentally different from the previous FinTech cycle. Recent issuers entering public markets are substantially larger and more profitable than earlier cohorts. Median revenue at IPO between 2024 and early 2026 was more than three times higher than the 2011–2019 period, according to FT Partners.

Public investors still reward growth, but only when paired with operating discipline and defensibility. The market is no longer underwriting speculative expansion at any cost.

That shift is reshaping the definition of what constitutes an “IPO-ready” FinTech company. Scale, profitability and infrastructure-like durability now matter more than narrative momentum alone.

At the same time, secondary markets are becoming an increasingly important liquidity mechanism. As private holding periods stretch longer, structured secondaries and shareholder sales are evolving from opportunistic transactions into institutional market infrastructure. FT Partners notes that FinTech secondary-market activity rose sharply in 2025, although most volume remains concentrated in a small number of elite companies.

The more important opportunity may lie in the industry’s long tail: thousands of mid-sized private FinTech firms that possess meaningful revenue and customer scale but remain illiquid. Many are likely to seek strategic sales, structured liquidity solutions or consolidation opportunities over the coming years.

That consolidation trend is already visible. FinTech-to-FinTech M&A has expanded dramatically over the past decade, reflecting the emergence of scaled platforms seeking broader product ecosystems rather than narrow point solutions. Increasingly, FinTech firms themselves, not traditional banks, are becoming the industry’s most active acquirers.

Artificial intelligence may accelerate this process further. Companies operating at the core of financial decision-making, fraud detection, underwriting, compliance and risk infrastructure, could strengthen their position as AI increases the value of proprietary data and embedded workflows. But lighter automation businesses may face growing pressure from AI-native competitors capable of replicating services faster and more cheaply.

What emerges from all this is not the collapse of FinTech, but its maturation.

The next decade is unlikely to resemble the industry’s disruptive startup era. Instead, it may look more like an infrastructure consolidation cycle, defined by IPOs, secondaries, acquisitions and the gradual integration of private FinTech into mainstream capital markets.

After two decades of expansion outside traditional financial structures, the sector now appears to be entering its liquidity phase.

END NOTES

1. FT Partners & Blue Dot Investors. The Coming FinTech Liquidity Supercycle (April 2026). Uploaded PDF provided by user.

2. Boston Consulting Group. Global Fintech 2024: Prudence, Profits, and Growth.

3. PitchBook-NVCA Venture Monitor data referenced within FT Partners report.

4. FT Partners Research:
   FT Partners Research

5. Blue Dot Investors:
   Blue Dot Investors

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At its core, the report argues that gold combines scarcity with scale. It describes the market as “a US$31tn market”, built on nearly 220,000 tonnes of above-ground stock accumulated over centuries. This stock is not just large—it is permanent. As the report notes, gold is “virtually indestructible”, meaning past production continues to influence current supply and price dynamics. (World Gold Council)

Source: WGC Report

A key insight from the report is the size of the investable universe. It states that “the total investible gold market is worth US$15tn”, of which physical gold accounts for the bulk and derivatives form a smaller but important layer. This distinction matters: physical holdings anchor the system, while derivatives enhance liquidity and price discovery. (World Gold Council)

Liquidity is another defining feature. The report highlights “institutional-grade liquidity”, supported by deep over-the-counter markets and active futures exchanges. This allows gold to absorb large institutional flows without major price disruption—an attribute few asset classes can match. (World Gold Council)

Despite this scale, the report emphasises that gold remains underrepresented in portfolios. It calls gold “an under-owned strategic investment”, noting that it accounts for only a small share of global financial assets. This gap, implicitly, is where future demand could emerge. (World Gold Council)

Finally, the report frames gold’s resilience through its structure. It points to “diverse structure supports stability”, where demand spans jewellery, investment and central banks, while supply comes from both mining and recycling. (World Gold Council)

The conclusion is straightforward: gold is not just a legacy asset. It is a large, liquid and under-allocated market with structural features that allow it to remain relevant across economic cycles.

Source: WGC Report

These charts show broad-based gains and stable growth expectations. Yet the strength of returns sits awkwardly against a world marked by geopolitical tensions, tariff uncertainty and policy shifts. The report argues that risk assets are trading at uneasy highs. Valuations are stretched. Credit spreads are tight. Optimism is widespread.

Forward price-to-earnings ratios are elevated relative to their 20-year history. Credit spreads are compressed. Neither condition guarantees an imminent correction. But both reduce the margin for error. When markets are priced for stability, even modest shocks can trigger outsized volatility.

The more troubling signal is behavioural. Investor conviction in growth appears firm, even as economic policy uncertainty remains elevated. That disconnect has historically been fertile ground for volatility. Gold’s strong performance in recent years reflects this mismatch.

Despite its rally, gold remains under-owned relative to historical optimal allocation ranges. In other words, positioning does not look crowded on a strategic basis. That matters if investors begin to reassess risk.

Inflation presents another fault line. Core US inflation remains sticky and the output gap suggests limited slack in the economy. If inflation re-accelerates, central banks may have less room to ease. Bond markets, which many investors rely on for diversification, may not provide the same protection they once did.

The stock–bond correlation has shifted in recent years. In periods of stress, bonds have not always cushioned equity drawdowns as reliably as in the past. In such an environment, the case for alternative diversifiers strengthens.

Equity market leverage is another concern. US margin debt has surged alongside the market. While rising margin debt does not automatically signal a peak, excessive increases have historically preceded periods of instability.

Leverage magnifies both gains and losses. If earnings disappoint or policy surprises emerge, unwinding leveraged positions could amplify downside moves. In such episodes, safe-haven demand typically rises.

Gold’s historical record during crises reinforces this point. Even after periods of strong prior returns, it has tended to provide resilience during market stress. It has generated positive returns in multiple crisis episodes while equities declined, and it has reduced overall portfolio drawdowns.

The central message is not that a crisis is inevitable. Nor is it that equities cannot continue higher. Rather, it is that the balance of risks has shifted. Valuations are full. Inflation risks linger. Policy uncertainty remains high. Leverage is rising.

In that context, gold’s role as a strategic asset becomes relevant again. It offers diversification when correlations shift. It can hedge inflation risk if price pressures re-emerge. And it has historically mitigated portfolio losses during systemic stress.

The case for 2026 is therefore not built on fear alone. It rests on portfolio construction. When markets are priced for perfection, resilience matters more than return chasing. Gold, even after a strong run, may still deserve a place at the core of long-term asset allocation.

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If you treat it like stocks, you will likely fail.

What Crypto Actually Is

Bitcoin was born out of the 2008 financial crisis, when trust in banks broke. It is decentralised, has a fixed supply of 21 million coins, and no central authority can print more. That scarcity explains why long-term price trends point upward.

But zoom in and it is chaos.

Bitcoin is extremely volatile. Sharp rallies are followed by brutal drawdowns. That volatility is both the opportunity and the danger.

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The Truth About Altcoins

Outside a small group of large, liquid assets such as Bitcoin, Ethereum or Solana, most altcoins are not investments. They are speculation.

The usual pattern is simple:

• Prices spike

• Early insiders exit

• Late buyers are left holding losses

Blind buy-and-hold works poorly in crypto. Even experienced participants admit this openly. Many do not store serious long-term wealth in crypto at all. They use it mainly for trading, while relying on ETFs and traditional assets for capital preservation.

Where the Real Edge Is

The edge in crypto is not prediction. It is structure and risk management.

Most retail traders only use futures, betting on price going up or down. Few understand:

• Funding rates

• Position sizing

• Margin types

• Leverage control

• Options strategies

This is where experienced traders quietly outperform. Options, when used properly, allow controlled risk and income-style strategies. Futures allow leverage and shorting, but misuse leads to fast liquidation.

Leverage Is Not the Enemy

Poor structure is.

Many accounts blow up not because leverage exists, but because traders do not understand:

• Cross margin versus isolated margin

• How much capital to risk per trade

• When not to trade

Demo trading is not optional. It is survival training. Real money introduces emotion, and emotion is where most accounts die.

How to Apply This in Real Life

• Do not treat crypto like equities

• Separate investing from trading

• For long-term exposure, keep it small and stick to top-tier assets, or skip it entirely

• If trading, use demo accounts until profitability is repeatable

• Use leverage sparingly and only after understanding margin mechanics

• Avoid random altcoins unless you accept that you are speculating

• Focus on risk first. Profit follows automatically if risk is controlled

The Bottom Line

Crypto is not magic. It is a tool.

Used with discipline, it compounds skill.
Used emotionally, it wipes capital.

Final takeaway:
In crypto, being disciplined beats being bullish, every single time.