These funds mostly invest in corporate bonds, treasury bills, certificates of deposits, nonconvertible debentures, commercial papers, and so on. Investors get a return that is equal to the portfolio yield (minus the expense ratio).
Advantages of FMPs: The fund manager selects the debt instruments at the start of the tenure and holds them until maturity. Due to the buy and-hold strategy that these funds follow, investors are not exposed to interest-rate risk. Even if interest rates rise during the tenure of the FMP, the investor does not suffer a loss.
FMPs allow investors to lock into the prevailing interest rates. In an environment where interest rates are high and are likely to come down in the future, investors who put their money in an FMP can ensure that they get the benefit of the current high rates.
Since the fund manager does not buy and sell securities during the tenure of the FMP, costs get minimised.
FMPs are also more tax-efficient than fixed deposits. An investor in the highest tax bracket has to pay tax at the rate of 30 per cent plus in a fixed deposit. On the other hand, an investor in an FMP, who has invested for more than three years, has to pay tax at the rate of 20 per cent. He also gets the benefit of indexation. A lower tax rate helps to boost the post-tax return from an FMP.
Disadvantages of FMPs: On the flip side, investors can only invest in an FMP during a new fund offer (NFO). Once this period ends, the fund is closed to any further investment.
Bu hikaye Investors India dergisinin October 2021 sayısından alınmıştır.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.
Already a subscriber ? Giriş Yap
Bu hikaye Investors India dergisinin October 2021 sayısından alınmıştır.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.
Already a subscriber? Giriş Yap
Indians are Developing Weak Bones
In India, 1 out of 8 males and 1 out of 3 females suffer from osteoporosis, making India one of the largest affected countries in the world.
"The strategy behind the Tata India Innovation Fund centers on identifying companies that are driving transformative or incremental changes through innovation"
Yes, we certainly believe innovation is a powerful theme with immense potential for the coming years, and we are excited to bring it to our investors.
What is Hybrid Mutual Fund?
Hybrid Mutual Fund is a combination of more than one type of fund. While they invest in shares of companies listed on the exchange, like equity funds.
Should you invest in dynamic bond funds?
Dynamic bond funds have delivered a category average return of 8.68 per cent over the past year, making them the fourth best-performing category, following long-duration funds, constant maturity gilt funds, and gilt funds. With interest rate cuts yet to begin, these funds remain a viable option for investors seeking to benefit from possible rate reductions.
The Multicap Solution to India's MultiDimensional Growth
India is entering a transformative era of economic growth, backed by a unique combination of demographic strength, infrastructure development, and rising global prominence.
The Long-Term Benefit of Investing in Children's Future
A child is the most treasured part of any parent's life, and naturally, we want to give them the best of what the world has to offer. This often means not only ensuring we can meet their needs but also nurturing them to pursue their unique aspirations. Each child has their own dreams and challenges, making the early years critical as they lay the foundation for a healthy and fulfilling future.
ASK THE EXPERT
Ques. One of my friends told me that your company provides detailed Retirement plans. I want to know what is the procedure to get my Retirement plan. I will be retiring in March 2025. R.P Gupta, Noida
How to Naturally Reverse Fatty Liver Disease
The liver, located on the upper-right side of the abdomen, is the body’s largest internal organ and plays a critical role in detoxifying the blood and processing nutrients.
Banking sector which has underperformed in the last two years, now offers a favorable risk-reward profile
Do you think the market is overpriced? Is yes, should investors refrain from investing in index schemes at the current valuation?
India will continue to enjoy benefits of a close US relationship and trade will continue to grow
Q1. The US elections are said to be one of the closest till date, what impact will the election of a Republican / Democratic party have on the US economy and how is that going to affect India in the short as well as the long term?
