Lock into rising bond yields with FMPs, hold on to them till maturity

Do not compromise on credit quality for high returns, and make sure the fund's tenure matches your investment horizon

In May, investors put Rs 117.08 billion in fixed maturity plans (FMPs), a category of closed-end debt mutual funds. In a rising interest rate scenario, these are attractive products that allow investors to lock into existing yields. Investors, however, need to pay heed to a few aspects when selecting these funds.  

Investors can purchase FMPs during the new fund offer (NFO) period. At the time of investing, they can consult the scheme information document (SID) and learn about the rating of the instruments that the portfolio will hold. Expected returns are not disclosed, but your advisor will be able to