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 12th December, 2008
Maturity Date 12th December, 2011
Tenor of the scheme 1095 days
Retail Plan: 10 to 10.50%
Indicative Yield
Institutional Plan: 10.50 to 11%
Entry Load Nil.

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%
Exit Load 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%

Retail Plan: Rs.5,000/-

Minimum application amount
Institutional Option: Rs.25,00,000/-

To seek to generate returns by investing in a portfolio of fixed income

Investment objective 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