Fixed Maturity Plans Get Round Sebi Fiat

Fixed maturity plans (FMPs), which are all the rage now among mutual fund houses, appear to be serial plans revisited, clearly skirting a two-year old Sebi regulation which says serial plans should not be a sub-plan of a fund scheme but should be launched as a scheme in itself.

Mutual fund circles admitted the similiarity of the FMPs with serial plans launched around a couple of years ago. Serial plans are fixed plans timed to coincide their maturity with that of the instruments they invested in. But they are open-ended while FMPs have a fixed offer period and subscriptions are not accepted outside the initial offer period. Exits are discouraged with high exit loads.

FMPs are schemes with varying maturity periods, usually ranging between three months and one year, and offer investors the advantage of steady and regular returns.

FMPs have become popular since January 2002 and during the past couple of months, these offerings have been attracting a lot of corporate interest.

According to mutual fund circles, a number of investors, especially corporates, are moving away from bond funds and gilt schemes and getting into FMPs