I invested in an FMP, which is now due for maturity. However, the fund house has extended the tenure by approximately a year, owing to a default. What should I do?
- Aayush
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When AMCs extend the tenure of an FMP, then they have to provide investors with an interim exit opportunity. If you decide to avail it at the current NAV, then your realisation will be lower. And because of this reason only, the fund house has extended the tenure of your FMP so that they can work around the default and you don't have to compromise on the return. I would say that if you don't need the money urgently, then you must hold on. However, if you have some urgent need, then take the lower return and get the money.
I hope that what currently looks like a loss of return will become realisable. Also, because of the delay, you will earn extra interest, as 85-90 per cent of your portfolio is still at work, thus yielding return. It's the other 5-10 per cent of the portfolio that is eating away your return. Given these, I would say that if you are a fixed income investor, then the extension of your tenure will not be an opportunity loss.
You shouldn't panic because acting in a huff will put you at a disadvantage. All you should do is to assess your own requirements. If you don't need the money urgently, go for the extension. If you need the money, then, by all means, take the money back even if it is less.