Indexation benefits make three-year FMPs a good bet.
Come March and there will be a flurry of new fund offers from asset management companies in the country. Most of them will not be for regular equity oriented mutual funds but what are called fixed maturity plans or FMPs -- close-ended debt schemes whose money is invested in fixed-income securities for a specific tenure.
“Coupon rates are going up and, hence, FMPs have become attractive. Debt yields have also been going up. On the other hand, fixed deposit rates are not likely to move up until the Reserve Bank of India increases the rates. The only way to benefit from these rising yields is by investing in debt funds. The AA papers can earn up to 100 bps (1 per cent) more than government securities,” says Vidya Bala, Head of Mutual Funds Research at FundsIndia.
Axis Mutual Fund, Aditya Birla Sun Life Mutual Fund, Invesco Mutual Fund, Reliance Mutual Fund, SBI Funds, Sundaram Mutual Fund are all offering FMPs with durations ranging from 1,159 days to 1,386 days. If you think the duration is inspired by numerology, you are mistaken. By launching FMPs towards the fag end of the financial year, fund houses help investors claim inflation indexation benefit for four years – 2017/18, 2018/19, 2019/20 and 2020/21. The investments would be held for a little more than three years between March 2018 and April 2020.
Rate Cycle
Denne historien er fra March 25, 2017-utgaven av Business Today.
Start din 7-dagers gratis prøveperiode på Magzter GOLD for å få tilgang til tusenvis av utvalgte premiumhistorier og 9000+ magasiner og aviser.
Allerede abonnent ? Logg på
Denne historien er fra March 25, 2017-utgaven av Business Today.
Start din 7-dagers gratis prøveperiode på Magzter GOLD for å få tilgang til tusenvis av utvalgte premiumhistorier og 9000+ magasiner og aviser.
Allerede abonnent? Logg på
Pension Scheme - Safety Net
The move to introduce the UPS has evoked mixed reactions. Analysts believe its funding will have limited impact on the fiscal math
The Reit Choice?
Real Estate Investment Trusts (Reits) Are Gaining Traction As Interest Rates Stabilise. But Returns Could Be Affected By Adverse Economic Conditions And Market Volatility
CORPORATE - Calling to Account
The sudden exit of Byju's auditor BDO marks the latest in a long series of setbacks for the edtech firm
EMPLOYMENT: Skills Push
The skill development ministry plans to partner with the UGC to improve the employability of undergraduates
Building on a Vision
L&T'S CHAIRMAN EMERITUS A. M. NAIK HAS BUILT A MAMMOTH ENTERPRISE THAT IS BUILDING A NEW INDIA, FROM ITS METRO RAIL SYSTEMS TO THE RAM TEMPLE
"KYS more important than KYC"
Vijay Kedia is a renowned equity investor; the value of his listed portfolio stands at around ₹1,750 crore
ROXX STAR
THE THAR ROXX COMBINES LUXURY WITH PERFORMANCE TO MAKE A STRONG STATEMENT IN THE MID-SIZE SUV SEGMENT
HIT THE GROUND RUNNING
Smartwatches have become indispensable tools for runners, offering real-time insights into pace, distance, heart rate, and more. Here are a few you can consider
TURNING THE TABLES
INDIA'S FURNITURE MARKET IS POISED FOR A GLOBAL TAKE-OFF. ALREADY, A HOST OF GLOBAL BRANDS HAVE MADE THE COUNTRY THEIR HOME, BUT INDIAN COMPANIES ARE NOT TOO FAR BEHIND
THE EVOLUTION OF ATHERA
IDENTIFYING OPPORTUNITIES IN ADVANCE HAS STOOD THIS BENGALURU-BASED VC FUND IN GOOD STEAD. NOW, WITH A HEIGHTENED FOCUS ON TECHNOLOGY, IT WANTS TO SUSTAIN THE SUCCESS