“90% of FMP assets were rated AAA or A1+”

November 23, 2008 by  

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Surendra Bhave,SEBI Chairman, makes positive statement about FMPs (fixed maturity plans)

Asked a question about FMPs, and the possible risks and fears of FMP investors, Surendra Bhave,SEBI Chairman, suggested that asset quality of most fixed maturity plans were good, since 90% of FMP assets were rated AAA or A1+

The risks of FMP schemes now seem limited to liquidity concerns due to massive withdrawls from certain FMP schemes by HNIs

SB Bhave, SEBI Chairman, however, cautioned investors that any mutual fund investment had a risk element

SB Bhave, reminded investors that people who wanted to play safe and avoid risk should invest in Fixed Deposits of banks and shouldnt even be looking at equity or mutual funds which carried a risk

Reading between the lines, FMPs seem to be a better footing now , with even the liquidity problem easing in

FMP and mutual fund investors should a little easier from SB Bhave’s statement- it suggests that any problems due to poor fixed maturity plan asset quality should now be limited to select mutual fund houses that were not careful in allocating FMP portfolios

Of course, investors may be worried if “their” Fixed maturity plan scheme is one of those FMPs with bad portfolio allocations

Those investors who are still worried about their FMP investments are better off reading mutual fund fact sheets that detail the Fixed Maturity Plan portfolios that the mutual fund has invested in

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