If your clients are looking for growth of capital through investments made in a basket of debt/ fixed income securities but with indexation benefits, L&T FMP Series XX - Plan A (1471 days) (a close-ended debt fund) can be one of the choice in the current market scenario.
For the fixed income investors, planning for financial goals can be a little complicated in the backdrop of interest rate fluctuations and inflation. Ideally, if he could minimize interest rate risk, which poses the biggest threat to his investment plans, he can think of being in a comfortable place. This is where this FMP aims for.
To make it simple, we listed five advantages of investing in L&T FMP Series XX - Plan A (1471 days), whose New Fund Offer is from October 27, 2020 to October 28, 2020.
High quality portfolio
A typical FMP invests in debt and money market instruments like certificates of deposit (CDs), commercial papers (CPs) and government securities. L&T FMP Series XX - Plan A (1471 days) would predominantly invest in state development loans (SDL), G secs, treasury bills and cash & cash equivalent instruments, which are less risky.
Risk minimisation strategy
The scheme will invest only in thoroughly researched debt securities to mitigate the issuer specific risk. Risk will also be managed through broad diversification in terms of number of securities. Overall, the scheme aims to control risk at moderate level.
Structured investment process
The AMC will follow a structured investment process to identify the best securities for investment and has developed an internal research framework for constant monitoring of securities.
Staying away from risky investment
The scheme will not invest in securitised debt and structured obligation or credit enhancement, repo/reverse repo in corporate debt securities or in foreign securities (including foreign securitized debt).
No engagement in short selling
Further, to avoid any operational and default risk, the FMP will not engage in securities lending or short selling and does not propose to invest in credit default swaps
Commenting on why investors should consider investing in FMP, Kailash Kulkarni, CEO, L&T MF said, "Long-term Fixed Maturity Plans offer investors multiple benefits including cushioning against interest rate volatility and credit risks. Investors who are looking for options in asset allocation and investing in tax efficient financial products for achieving long-term goals, may add this product to their portfolio."
L&T FMP Series XX - Plan A (1471 days), close-ended MF scheme, with a tenure of 1471 days shall invest 90-100% in debt instruments, government securities, state development loans (SDLs) and upto 10% in money market instruments.
