Fixed maturity plans (FMPs) have fixed opening and maturity dates, and if they are held to maturity, they can give predictable returns like fixed deposits (FDs). So are FMPs immune to the current market risks and also are they a better alternative to FDs?
FMPs are exposed to a lot more credit risk than FDs. As aggressive credit bets in FMPs soured, the industry turned away from them. Launches of closed-end funds (most of which are FMPs) plunged from 526 in FY19 to just 94 in FY20, data from Pulse Labs, mutual fund analytics and research firm, showed.
