Fixed maturity plans (FMPs) have been in the news in recent times due to leading fund houses like Kotak Mutual Fund (MF) and HDFC MF, which had exposure to the troubled Essel Group papers, facing issues at the time of redemption. The decision by Kotak MF to redeem partially and by HDFC MF to roll over its FMP created controversy.
These events also led to investors asking if they should invest in FMPs at all, or whether they should stick to open-ended debt funds. FMPs have fixed tenures, ranging from one month to five years. An investor in an FMP new fund offer gets locked in till ...
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