Host of fixed maturity plans ending today - BL

Shorter-term plans may remain active, expect distributors

In a background marked by rising indicative yields and the rush to collect assets before the close of the fiscal, a host of FMPs (fixed maturity plans) are set to close this week even as fund houses make it tough for investors to exit these plans before maturity.

March 28 happens to be a particularly crucial date for the asset management industry — a number of FMPs are closing on that day, many of them carrying indicative yields in the 10.5-11.25 per cent range.

In a lot of cases, the fund houses concerned have set an exit load of 2 per cent for clients who may wish to pull out before the plans mature.

Steeper exit load even for shorter-term funds is to discourage investors, some of whom have perfected the practice of withdrawing early, said Mr Brijesh Dalmia, CFP.

Exit load

FMPs in this group include those offered by the likes of SBI MF, Standard Chartered, Principal and DWS.

These will join the long list of plans that have closed in the last few weeks, each adding to the year-end numbers that asset management companies will log when the next round of assets under management figures are released.

In a few odd cases, the exit load will depend on the time period for which an investor stays put. Two of Standard Chartered MF's plans, for instance, will charge 2 per cent for those who move out before six months and 1.5 per cent for those who do it later (but before maturity).

Both plans — their closing date is March 28 — have a duration of a little over 12 months, distributors indicate.

March 28 is also the key date for Kotak Mahindra MF's 3-month Series 14.

The plan, with an indicative yield of 11.25 per cent, opens and closes on the same day.

That date is also an opening date for a quarterly plan from the UTI MF stable.

Short-term plans

On another front, distributors suggest that the market for shorter term plans will remain quite active, thanks to fund houses' willingness to launch these products.

A few of these have reopened in recent days.

Lotus India MF's short-term plan, for instance, has just reopened and is expected to invest in short- and medium-term debt instruments carrying nine-15 months' maturity.

Plans such as these are mostly positioned for clients who need fixed returns and security of capital for shorter time periods, it is pointed out.