Fixed Maturity Plans (FMPs) are close-ended debt funds with a fixed maturity somewhat like fixed deposits. But FMPs are different from fixed deposits because they invest in marketable debt securities like certificate of deposits (CDs), commercial papers (CPs), other money market instruments, corporate bonds, non-convertible debentures (NCDs) of reputed companies, or in government securities, maturing in line with the tenure of the scheme. Moreover, unlike fixed deposits, FMPs don’t have a guaranteed rate of return.
Being close-ended with securities maturing in line with the tenure of the fund, FMPs carry less liquidity and interest rate risk as compared to open-ended debt funds. FMPs are a suitable option if you are looking to lock your money for some time over the fixed period. FMPs offer tax-efficient returns through indexation as compared to
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