FMP

FIXED MATURITY PLANS

Fixed maturity plans known as FMP are plans that are in operation for a short period of time but they act like a quasi fixed deposit for the investors. This is because the fund manager selects the securities in the portfolio in such a manner that it matures on the same date as that of the scheme. This results in the situation where the investor will get a return near the yield of the investments when they were purchased because of reduced risk in the investment.

There is a reduced risk in this kind of an investment because of the fact that when the debt instruments in the scheme are held till maturity the intervening movement of interest rates in the market will not impact the investor in terms of the final returns because of the fact that the price of the debt instrument will converge to its face value at the time of maturity .