Right Time To Invest In FMPs

October 20, 2012 by  

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Perfect time to invest in FMP Fixed Maturity Plan NFOs from mutual funds

right time for FMPs

Investing in any mutual fund NFO is fraught with risk these days- is there a ray of hope in investing in fixed maturity plans? Yes! FMP New Fund Offers from Indian mutual funds are a good option for investments these days

Why can one consider FMP (fixed maturity plan) investments at this time? Why now?

Consider the current stock market and interest rate scenario

  • Stock markets at an intermediate high, with the sensex at around 18000 and stock markets likely to fall.
  • Interest rates are a high and the rates are set to fall soon. So, its a perfect time to lock into these high rates
  • FMPs are better than bank fixed deposits in terms of tax treatment for HNIs and retail investors
  • Fixed Maturity Plans from mutual funds offer the opportunity to buy a basket of fixed maturity debt securities,rather than a single corporate fixed deposit
  • Longer term FMP investments offer great tax benefits with prospects for single and double indexation tax benefits
  • With falling food inflation, it is likely that interest rates will fall soon. The RBI and the Indian Government are also giving similar messages leading to a possible fall in interest rates. Its the right time to lock into these higher rates
  • SEBI has tightened the governance of fixed maturity plans by Indian mutual funds by mandating that FMPs be traded in the stock market. Also, the fact sheet published by Indian mutual funds have ensured that if you can study the past performance as well as the expense ratios of FMP NFOs. This has led to more transparency in FMP investments.

In short, this is the right time to invest in FMP mutual funds- Invest soon before the opportunity window for fixed maturity plans disappear

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