August 31, 2013 3:03 pm
Hi , I need some more information with regards to FMPs and MIP. I want to invest some funds that can give better returns than bank FDs post taxation. Want to know how to go about choosing between a FMP or MIP
Thanks for that info Ashal.
Dear Vaibhav, before 2008 crash, FMPs were not listed on exchanges. During Oct 2008, when all of a sudden people started encashing their FMPs midway, it created a panic situation & fund managers were forced to sell their holdings in losses & this was the reason, SEBI mandated compulsory listing of FMPs there onwards. Interestingly RBI had to arrange special liquidity window at that time for redemption pressure & tight liquidity situation.
Few months back I had asked a Query about choosing FMPs, plz refer to the answers here –
You say FMPs had defaulted in 2008. Was it in India? Do you have some link which gives any details about the default (which fund house, scheme etc)?
I searched on google but couldn’t find info about any specific fund defaulting, hence asking.
Thanks Vaibhav for sharing the link. That was helpfull.
Dear Nitin, FMP stands for Fixed Maturity Plan & MIP stands for Monthly Income Plan. Interestingly MIP is merely name & there is no nguarantee of return or mly income from these type of funds.
One may invest in FMPs but do remeber in case of extreme scenarios, your FMPs may default (had happened in 2008). Are you ready for this extreme situation?
MIPs do have a small portion as Eq. investment, hence prone to market volatility. Are you ready for it?
Please think over it.
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