Fixed Maturity Plans (FMPs) out of favor with institutional investors?

January 17, 2009 by  

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Fixed maturity plans ( FMP mutual funds ) losing popularity with institutional investors in India

FMPs not popular anymoreFixed maturity plans , popularly known asFMP mutual funds, seem to be currently out of favor with institutional investors. The number of new FMP mutual funds launched in India has been dwindling since we had the scare with the perceived liquidity crisis in the mutual fund industry in India.

In fact,a check of new IPO open issues in India, suggests that almost no new FMP mutual fund IPOs (Fixed Maturity Plan IPOs) have been launched this month

The new SEBI regulations on fixed maturity plans could have had an impact on the launch of new FMP IPO s in India

The strict regulations that SEBI introduced for new FMP mutual fund IPO launches may have had an impact on the launch of new fixed maturity plans. One of the requirements from SEBI was to have to have compulsory listing of FMP mutual funds in India, and some mutual funds may be in the process of getting their infrastructure in place in order to comply with SEBI norms

In summary, fewer FMP mutual funds (fixed maturity plans) are being launched by Indian mutual funds, but it is not clear whether this is due to the newer SEBI FMP regulations or a temporary blip in confidence in fixed maturity plans

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