Volatile equity markets, a likely cut in interest rates by 50-75 basis points in the next 12 months and poor allotment in tax-free bond issues have brought fixed maturity plans (FMPs) back in focus. Added to this, indexation benefits in the last month of the financial year have led to a surge in FMP offerings.
As many as eight FMPs with tenure of three years and above (1,130-1,180 days) have been launched by mutual funds such as Birla, HDFC, ICICI Prudential, IDFC, Reliance, SBI, Religare and UTI Mutual Fund of late.
"The uncertainty in capital markets will lure investors towards the relative safety of FMPs. These plans offer a very well diversified portfolio and with the new guidelines, mutual funds cannot invest more than 10% of its NAV in a particular security," says Himanshu Vyapak, deputy CEO, Reliance Mutual Fund.
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