AMCs Launched 46 FMP Mutual Funds To Invest In July

The Asset Management Companies in India are busy in introducing their Fixed Maturity Plans. In July 2018, the AMCs have altogether launched 46 FMP mutual funds to invest.

Many such as HDFC MF, Aditya Birla Sun Life, ICICI Prudential MF, Axis Mutual Fund, DSP BlackRock, IDFC MF, Franklin India, DHFL Pramerica, HSBC, Kotak MF, Invesco India, SBI Mutual Fund, Reliance MF, UTI MF, and Sundaram Mutual Fund are active in introducing FMPs with a maturity period of above 1,095 days or 36 months.

According to Lakshmi Iyer, Chief Investment Officer-Debt and Head of Products, Kotak AMC, the MF industry witness increase in FMP launches whenever G-Sec yields are at an elevated level. Iyer also said that this is a “historical trend.”

The 10-year G-Sec yields have increased from around 6.5 to 7.82 in the past 12 months. Indeed, the G-Sec yields have improved by 65 bps in the past four months.

It is the right time to consider FMP mutual funds to invest for a three-year period since the G-Sec yields are high, said Shweta Jain, Founder and CEO of Investography. FMPs will offer higher post-tax returns, she added.

According to Pramod Sharma, Partner, Citrine Financial Advisors, investors could expect about 8 percent returns from the Fixed Maturity Plans.

The fund houses launch three-year FMPs as well as short-term FMPs. But the short-term FMPs are not very attractive for retail investors.

Fixed Maturity Plans are close-ended debt mutual funds that deploy in debt and money market securities like CDs, CPs, T-bills, government and corporate bonds. FMP investment is a perfect option for traditional investors who otherwise consider investing in bank fixed deposits.

Investors can consider FMP mutual funds to invest in India only during the NFO period, and continue the FMP until maturity or may sell it in the secondary market before the date of maturity of the scheme, reported The Economic Times.

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