Fixed Maturity Plans

Change required by the central bank could make a certain portion of loan books ineligible for securitisation

He reveals why fixed maturity plans (FMPs) remain relevant, notwithstanding the emergence of target maturity funds (TMFs) in the 'predictable return' space in debt

Constitution of underlying indexes doesn't matter since all the three categories of bonds they invest in are safe

For tax-efficient exposure, go for target maturity funds maturing in 2026-2028

Nearly 40% NFOs filed since July are for these passive debt funds

They are more transparent and control both interest-rate and credit risk

Stick to proven fund houses with at least a 5-year track record and see how they performed over market phases

The yield on the 10-year government security on Friday ended at 7.42 per cent

With the end of the financial year approaching, fund houses are launching fixed maturity plans (FMPs). New fund offers (NFOs) of FMPs from SBI Mutual Fund and IDFC Mutual Fund are on at present.

Lower interest rate risk and predictable returns key attractions

Impact on FMP investors from 'standstill' pact with Essel group put fund house in scrutiny

In an exchange note, Altico said it may have trouble making future repayments

The report also pointed out that the nature of recent FMP defaults had primarily involved debt obligations backed by pledging of shares of group companies

Open-ended debt funds, with their liquidity advantage, should be preferred in other circumstances

Downgrades for Reliance Home Finance, Reliance Commercial Finance spook investors and distributors too.

What are the lessons? It is that the regulator, the fund houses and investors should go back to the first principles

Entire repayment held back due to exposure to Zee group companies

However, with so many companies facing credit-related issues, opt only for portfolios where the bulk of securities have AA and above ratings

Do not compromise on credit quality for high returns, and make sure the fund's tenure matches your investment horizon

However, investors should put in money only if they are willing to stay for the entire tenure of the instrument