Fixed Maturity Plans
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Fixed Maturity Plans
MFS Presentation By: Robin Kapoor Deepak Kumar Sourabh Garg Pankaj Jain Prateek Nahar Vikas Sharma Tushar Garg
• • • •
Close Ended funds Investment made in Predefined maturity period Collects money from investors and invest in bonds • Several advantages • Exit Load
Common things to understand • • • • • •
FMP has dividend option? FMP returns assured? Availability and Loads? Is premature withdrawal allowed? Do NAV move Sharply? Does FMP have equity component?
• Capital Gain • Tax Advantage – Lower tax in comparison with FD – Dividend is tax free(14.165%)
Indexation Benefit • Index cost = Y * index cost of the year of maturity/ inflation index of that year
Comparison With FD
Problems occurring • • • •
Disclosure norms Maturity mismatch Interest rate risk Compromise on credit quality
Solution to Problems • Strict Portfolio disclosure norms • Mention the maturity period of underlying asset • Invest in good credit rating companies only
Current Scenario • SEBI Guidelines – Upto 6% exit load is allowed – Only 15-20% in single company
• • • •
Liquidity Problem HNI investors taking money out Recession fear NAV Problem
Examples-1 Current FMP ICICI Prudential FMP Series 48 - 3 Years Plan B Indexation Benefit Available! Opens on: 03rd November'08 Closes on: 05th December'08 Type of scheme
A Close-Ended Debt Fund
New fund offer price
Rs.10/- per units
Allotment Date Maturity Date
12th December, 2008 12th December, 2011
Tenor of the scheme
1095 days
Indicative Yield Entry Load
Retail Plan: 10 to 10.50% Institutional Plan: 10.50 to 11% Nil.
Exit Load
If the amount sought to be redeemed is invested for a period of one year Or less than one year from the date of allotment: 3% If the amount sought to be redeemed is invested for a period of more than one year from the date of allotment but redeemed before the date of maturity of the Scheme: 2%
Minimum application amount
Retail Plan: Rs.5,000/Institutional Option: Rs.25,00,000/-
Investment objective
To seek to generate returns by investing in a portfolio of fixed income securities/ debt instruments normally maturing in line with the time profile of the Plan.
Example-2
What should investor watch for? • • • • • •
Be aware of risks Choice of investment Reputed fund house Don’t get attracted by high returns Ask for portfolio Credit rating of companies
Robin Kapoor Deepak Kumar Sourabh Garg Prateek Nahar Pankaj Jain Vikas Sharma Tushar Garg
MFS Presentation By: Robin Kapoor Deepak Kumar Sourabh Garg Pankaj Jain Prateek Nahar Vikas Sharma Tushar Garg
• • • •
Close Ended funds Investment made in Predefined maturity period Collects money from investors and invest in bonds • Several advantages • Exit Load
Common things to understand • • • • • •
FMP has dividend option? FMP returns assured? Availability and Loads? Is premature withdrawal allowed? Do NAV move Sharply? Does FMP have equity component?
• Capital Gain • Tax Advantage – Lower tax in comparison with FD – Dividend is tax free(14.165%)
Indexation Benefit • Index cost = Y * index cost of the year of maturity/ inflation index of that year
Comparison With FD
Problems occurring • • • •
Disclosure norms Maturity mismatch Interest rate risk Compromise on credit quality
Solution to Problems • Strict Portfolio disclosure norms • Mention the maturity period of underlying asset • Invest in good credit rating companies only
Current Scenario • SEBI Guidelines – Upto 6% exit load is allowed – Only 15-20% in single company
• • • •
Liquidity Problem HNI investors taking money out Recession fear NAV Problem
Examples-1 Current FMP ICICI Prudential FMP Series 48 - 3 Years Plan B Indexation Benefit Available! Opens on: 03rd November'08 Closes on: 05th December'08 Type of scheme
A Close-Ended Debt Fund
New fund offer price
Rs.10/- per units
Allotment Date Maturity Date
12th December, 2008 12th December, 2011
Tenor of the scheme
1095 days
Indicative Yield Entry Load
Retail Plan: 10 to 10.50% Institutional Plan: 10.50 to 11% Nil.
Exit Load
If the amount sought to be redeemed is invested for a period of one year Or less than one year from the date of allotment: 3% If the amount sought to be redeemed is invested for a period of more than one year from the date of allotment but redeemed before the date of maturity of the Scheme: 2%
Minimum application amount
Retail Plan: Rs.5,000/Institutional Option: Rs.25,00,000/-
Investment objective
To seek to generate returns by investing in a portfolio of fixed income securities/ debt instruments normally maturing in line with the time profile of the Plan.
Example-2
What should investor watch for? • • • • • •
Be aware of risks Choice of investment Reputed fund house Don’t get attracted by high returns Ask for portfolio Credit rating of companies
Robin Kapoor Deepak Kumar Sourabh Garg Prateek Nahar Pankaj Jain Vikas Sharma Tushar Garg
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