Fixed Maturity Plans (FMP) – Good Tax efficient option for Investors
What is FMP (Fixed Maturity Plan)
An FMP is a closed-end mutual scheme that has a fixed tenure and invests in fixed-income securities. It invests in debt securities in such a way that they mature a day or two or few days before the FMP itself matures.
Investments: FMPs invest in fixed income instruments like CDs, CPs, money market instruments, corporate bonds; debentures of reputed companies or in securities issued by Government of India and fixed deposits. Effective August 2011, an FMP needs to give an indication of how its portfolio would look like. It has to give upper and lower limits of instruments in which it intends to invest, as per their credit rating, under various asset classes like CDs, CPs, securitized debt and so on.
FMP Returns – Now, Mutual fund companies are not allowe...