Investors parking their money in Fixed Maturity Plans (FMPs) must be very clear that they would not need to access the funds in the near future. With the trend of high exit loads on these schemes, the investor would be paying a heavy price for liquidity.
After the Asset Management Companies (AMCs) burnt their fingers with massive redemptions in the Fixed Maturity Plans (FMPs), they have realised that an ounce of prevention would go a long way. And that is the reason that exit loads on FMPs will now increase. SEBI has mandated that the maximum a fund house can charge as exit load on their close-ended debt schemes is 5%. And AMCs are now touching this limit.
The latest to do so has been SBI Mutual Fund. The AMC has raised the exit load on some of its FMPs to be launched on or after November 19, 2008. The exit load on SBI Debt Fund Series-13 Months Fund -9, 10 and SBI Debt Fund Series -18 Months Fund-4, 5, 6 has been raised to 4%
Fortis too has done so (read: Fortis Interval Plans).
Last week, ICICI Prudential Mutual Fund set the trend (read: Exit Loads Go Up).
This would definitely deter investors from making premature exits and one can expect all the AMCs to announce similar measures.