For investors having an investment horizon of over one year, fixed-maturity plans (FMPs) with 13-15 month maturity can offer a healthy 6.5 per cent to 7 per cent return. Fixed-maturity plans are close-ended funds with fixed maturity. They invest in debt instruments such as commercial papers, certificates of deposit and debentures. Some FMPs also have a small component of equity exposure to boost returns.
if one invests in FMPs of over one year tenure at this juncture, can easily expect a return of close to 7 per cent. As FMPs are close-ended and are held to maturity, any interest rate hike will not affect returns from such funds.
Apart from good and virtually guaranteed returns, FMPs are tax-efficient because of the double-indexation benefit they offer.
