The losing allure of FMPs

Retail investors’ interest in Fixed Maturity Plans (FMPs) has been fading away over the last few years. AMFI data shows that share of retail investment in FMPs has come to two percent now from 12 percent seen four years before. FMPs are close ended debt mutual fund schemes launched with maturity period of three/five years. With indexation tax benefit, they are seen alternative to Bank FDs. Experts cites credit quality issues that affected the debt funds in the recent past made retail investors jittery. Locking money for three years in low interest rate regime can be unattractive. AMCs too slowed down FMP launches as they are low yielding products for them.