Latest Fixed Maturity Plans
Here you can find the list of latest Fixed Maturity Plans available for subscriptions.
Fixed Maturity Plans are also Known as FMP. A fixed maturity plan(FMP) is a closed-ended debt scheme. The duration of all the invested papers are aligned with the tenure of the scheme. Alignment of duration with tenure helps to eliminate interest rate risk and reinvestment risk.
Last Updated on 26 Mar 2013
Where Fixed Maturity Plans Invest?
They typically invest in
1) Corporate Bonds
2) Certificate of Deposits
3) Commercial Papers
4) Money Market Instruments
5) corporate bonds
6) Bank fixed deposits and similar instruments.
What are the advantaged of investing in Fixed Maturity Plans?
The primary advantages Fixed Maturity Plans offer is tax benefit. They offer better post tax returns. Pre tax returns are a little higher than bank fixed deposits. Investors can opt for capital gains tax with indexation which is 20.6% or without indexation which is 10.3%. For investments in Fixed Maturity Plans more than 3 years double indexation benefit is available which further enhances the attractiveness of fixed maturity plans. If you are a short term investor with holding period of less than a year then dividend option is most suitable. For long term investors with investment horizon more than one year, growth funds and preferable.
What are the disadvantages of investing in Fixed Maturity Plans?
1) Very low liquidity though most of they trade in stock exchanges. You may be forced to sell at a steep discount to current NAV if you need funds urgently.
2) Though fixed maturity plans offer similar (little higher) returns than bank fixed deposits, they do not offer the convenience of premature withdrawal that banks offer with little penalty.
3) Default risk is a concern if they invest low grade corporate bonds and similar instruments
4) While Deposit insurance scheme protects investments upto 1 lack for fixed deposits in any recognized bank, no such assurance is available with fixed maturity plans.