FMP: Debt Speciality Fund

I was planning to invest some amount in debt funds. I understand that FMPs too are primarily debt funds. I wish to know more about them but could not find the category on your website. I also wish to know the full form of FMPs and whether I need a Demat account to invest in these funds? Could you recommend some good FMPs to me?
-Devi Kiran Kumar

FMPs stand for Fixed Maturity Plans. These are type of closed-end debt funds. They open for investment only during their new fund offer (NFO) period. Just like fixed deposits, FMPs also have a pre-defined maturity period. Their maturity period generally ranges from 15 days to 3 years. Value Research classifies FMPs under the Debt- Speciality category. You can track the performance of FMPs by choosing “Fund Selector” or “Point-to-Point Returns” tools from the Research Tool section on our website.

Coming to the second half of your question, there is no need for a Demat account to invest in FMPs. You can invest in FMPs just like any mutual fund scheme by filling up its application form. Since different FMPs have different maturity periods, choose one which suits your investment horizon with an indicative yield that is not way ahead off the market rates.

This article was originally published on October 07, 2008.