_ap_ufes{"success":true,"siteUrl":"www.investmentyogi.com/w","urls":{"Home":"http://www.investmentyogi.com","Category":"http://www.investmentyogi.com/category/alternative-investment/","Archive":"http://www.investmentyogi.com/2015/02/","Post":"http://www.investmentyogi.com/salient-aspects-of-union-budget-2015/","Page":"http://www.investmentyogi.com/nri/","Nav_menu_item":"http://www.investmentyogi.com/trending/","Wpcf7_contact_form":"http://www.investmentyogi.com/?post_type=wpcf7_contact_form&p=5591","Flare":"http://www.investmentyogi.com/flare/email/"}}_ap_ufee

Yogi Zone

Useful articles for your finance management by our team of experts

FMP’s on Offer

1 Flares 1 Flares ×

fixed maturity plansInvestment in debt funds is subject to interest rate risk. Interest rate risk increases with increasing maturity. Because of interest rate risk, NAV of debt funds fluctuate with the changing interest rate. As a mutual fund investor, if you wish to hold the investments for a defined period, you will have to bear the interest rate risk at the time of withdrawal. But there is a mutual fund debt plan, which by virtue of its structure reduces the interest rate risk as the withdrawal time approaches. These plans are popularly known as Fixed Maturity Plans (FMP) or Fixed Term Plans (FTP). Let’s find out more about them.

What are Fixed Maturity Plans (FMP’s)?

Fixed Maturity Plans are close ended mutual fund investment schemes. They have a fixed tenure having a maturity period in the range of one month to five years. Fixed maturity plans are basically debt funds having maturity of the invested debt securities portfolio closely aligned to the maturity of the scheme. The primary investment objective of FMP is to generate returns and capital appreciation by investing in a portfolio of Debt and Money Market Securities and protect the investor against Interest rate fluctuations.

Alignment of investment portfolio maturity period and the scheme maturity period helps in minimizing the interest rate risk. At the time of redemption, the fund is not required to sell the investment portfolio in the market, but the investments themselves mature and provide the maturity amount for redemption. Since the fund does not have to sell the investments in the market, interest rate risk is reduced.

Return and Liquidity

The investment portfolio of fixed maturity plan does not have a fixed yield. This implies that there might be a slight deviation (either positive or negative) at the time of redemption from what was indicated at the fund offering.

FMP’s are close-ended debt funds and in order to provide liquidity to the investors, these funds are listed on the stock exchange. Even though they are listed on an exchange, it should not be taken as a guarantee for high liquidity.

These funds are suitable for investors who are sure about the time horizon of their investment. An investor should align the time horizon with the maturity of the FMP.

Taxation of FMPs

In case of FMP investment, the tax implication depends upon the investment option chosen (dividend or growth) and the tenure of investment (Long term or short term).

 

FMP OptionDividend Growth Short Term (Investments are held for less than 365 days)Growth Long Term (Investments are held for more than 365 days)
TaxationInvestors have to bear the dividend distribution tax.The interest income is added to the investor’s income and is taxed at the marginal tax rate as per tax slab.The tax liability is lower of calculation with indexation (charged at 20% plus surcharge) and without indexation (charged at 10% plus surcharge).

Currently Available FMP schemes

(Data has been compiled from valueresearchonline)

FundTenure(days)OpeningClosingMaturity Date
BSL FTP Series IJ Direct

91

30 - Sep03 - OctNA
BSL FTP Series IJ Reg

91

30 - Sep03 - OctNA
DSPBR FMP Series 121 3 Months Direct

90

30 - Sep07 - OctJan 09, 2014
DSPBR FMP Series 121 3 Months Reg

90

30 - Sep07 - OctJan 09, 2014
Religare Invesco FMP Series XXI Plan C (91D) Direct

91

20 - Sep04 - OctNA
Religare Invesco FMP Series XXI Plan C (91D) Reg

91

20 - Sep04 - OctNA
Baroda Pioneer FMP Series I Plan A

366

19 - Sep03 - OctNA
Baroda Pioneer FMP Series I Plan B Direct

366

19 - Sep03 - OctNA
BSL FTP Series IH Direct

368

30 - Sep03 - OctNA
BSL FTP Series IH Reg

368

30 - Sep03 - OctNA
DSPBR FMP Series 122 12 Months Direct

365

30 - Sep08 - OctOct 13, 2014
DSPBR FMP Series 122 12 Months Reg

365

30 - Sep08 - OctOct 13, 2014
ICICI Prudential FMP Series 70 368 Days Plan M Direct

368

30 - Sep03 - OctNA
ICICI Prudential FMP Series 70 368 Days Plan M Reg

368

30 - Sep03 - OctNA
IDBI FMP-Series III 366D (September 2013) M Direct

366

19 - Sep03 - OctNA
IDBI FMP-Series III 366D (September 2013) M Reg

366

19 - Sep03 - OctNA
IDFC FTP Series 40 Direct

368

27 - Sep03 - OctOct 07, 2014
IDFC FTP Series 40 Reg

368

27 - Sep03 - OctOct 07, 2014
Axis FTP Series 41 (546Days) Direct

546

25 - Sep03 - OctNA
Axis FTP Series 41 (546Days) Reg

546

25 - Sep03 - OctNA
IDFC FTP Series 41 Direct

615

01 - Oct03 - OctJun 11, 2015
IDFC FTP Series 41 Reg

615

01 - Oct03 - OctJun 11, 2015
Tata FMP Series 44D Direct

543

25 - Sep03 - OctApr 02, 2015
Tata FMP Series 44D Plan A

543

25 - Sep03 - OctApr 02, 2015
1 Flares Facebook 0 Google+ 1 Twitter 0 Email -- 1 Flares ×