FMPs: Lessons for investors, MFs & Sebi

What are the lessons? It is that the regulator, the fund houses and investors should go back to the first principles

Investors in mutual funds have woken up to another rude shock. A few months ago it was some debt funds that were found to have a massive exposure to the nearly bankrupt Anil Ambani group, the overstretched Zee group, the controversial Dewan Housing and the tottering, mismanaged giant Infrastructure Leasing & Financial Services. This festering issue has hit the fund industry again. This time it is fixed-maturity plans (FMPs) that have an exposure to the Zee group.

A few FMPs of two fund houses that were maturing last week have either not been able to pay their investors in full, or