Are FMPs a better place to invest in?

There are six funds in the offer at the moment. Their maturity ranges between 12 to 13 months.

The taxation structure in these funds is much better than what it would be for a fixed deposit. Investors make above 8%- 8.2% of post tax returns in FMPs whereas they would make only 6% in fixed deposits. (View - New Fund Offers open NOW)

Fixed maturity plans          Closes            1 yr post-tax return

Lotus Series XI                        June 25                 8.3-8.9%

DBS Chola Sr 9                       June 26                 8.1-8.2%

Kotak FMP Sr 7                       June 26                 8.6-8.9%

LIC Series 42                           June 27                 8.9%

DSPML Sr 1                            June 30                 8.2-8.7%

Birla Series AW                       July   7                  8.7%

The indicative yields of these funds are between 9.1-10.1%, if one keeps inflation at 5%. If the rate of inflation goes up to 9% on an average, then the indicative yield will also go up and so will the post tax return. But the rate of return will come down as inflation will eat into that money. 

They raised an overall corpus in assets under management of about Rs 72,374 crore.  They raise Rs 55,085 crore in FY07-08 and Rs 4,106 crore between April-May 2008.

Although the returns are not guaranteed as they are in fixed deposit, there have never been any funds that have gone belly up.

By Shailendra Bhatnagar, CNBC-TV18: