FMPs Losing Popularity Among Investors : Fund Houses

Fixed Maturity Plans (FMPs), one of the most popular mutual fund products, seem to have lost their popularity among investors. These are close-ended mutual fund schemes for a short period of time. The decline in surpluses over the past few months have forced corporate investors to cut back their investments in fixed maturity plans. These products have lost their charm when rates started moving the downward trail.

A few fund houses recently withdrew their Fixed Maturity Plans (FMPs) during the subscription phase. Many fund houses felt that they are unable to mobilise the sebi-mandated target amount of Rs.20 crore. This was one of the reasons for several fund houses to withdraw their FMPs.

As per SEBI guidelines, individual FMPs should have a minimum of 20 investors and no single investor should exceed 25% of the fund. To implement these guidelines, fund houses have to extend their subscription phase to pool in necessary investments and required number of investors.