In the first week of December 2008, the Securities & Exchange Board of India (SEBI) had announced the mandatory listing of Fixed Maturity Plans in a recognized exchange to disallow early exit in close-end schemes.
And the first scheme to come out under this new regulation will be ICICI Prudential Mutual Fund's ICICI Prudential Fixed Maturity Plan - Series 47-15 Months Plan A. The scheme will be the first close-end debt fund to be listed on a stock exchange.
For investors, what this means is that those looking to invest in an FMP should now be prepared to wait till maturity because redeeming the fund through the exchange won't seem to be a fair deal. Close-end listed funds generally trade at a steep discount to their NAV. Moreover, the investors need to have a demat account to execute the early redemption process as well.
The fund, like any other FMP, would primarily invest in fixed income securities/debt instruments, normally maturing in line with the time profile of the plan. The fund will mature on the 450th day from the date of allotment of the scheme.
However, for fund houses, FMPs seem to have lost their lustre after the regulator's initiative to bring transparency and discipline in the working of these funds. This is evident from the fact that only six such schemes have been launched during the December 2008 - January 2009 period as against sixty-odd launched during the December 2007 - January 2008 period.
NFO Opens: January 14, 2009
NFO Closes: January 20, 2009
Entry Load: Nil
Exit Load: Not applicable
Minimum Application Amount: Retail Investors-Rs 5000
Institutional Investors- Rs 1 crore
Maturity: On the 450th day from the date of allotment.
Plans: Retail & Institutional
Options: Cumulative & Dividend (Dividend Payout option only)
Benchmark: CRISIL Short Term Bond Fund Index
Fund Manager: Mr. Chaitnya Pande