If you track mutual funds, chances are high that you would have seen at least one brochure advertising the benefits of investing in fixed maturity plans (FMPs) in the last 6-8 months!
AIG, Lotus India AMC, DSP Merrill Lynch MF, Fidelity, the list seems endless. As stocks become the most hated word, FMPs have emerged as favourites by simply combining small investments, tax savings and assured returns.
FMPs offer good fixed income. Their portfolios do not change much. Risk-averse investors and especially those falling into the higher tax brackets should go for these products.
With more than 27 fund houses having launched FMPs with tenures ranging from 3 months to a few years, FMPs are being lapped up by all and sundry as a viable alternative to fixed deposits in banks. The minimum investment of Rs 5,000 is attracting scores of smaller investors. By investing in debt instruments with the intent of holding them to maturity, FMPs are appearing to be a safer haven for all those who are fed up with falling share prices.
