With the stock market yo-yo giving investors the jitters, many mutual fund companies are launching new fixed maturity products (FMP), which they say are the best investment options in these uncertain times.

How does the FMP is different from all the fund? Unlike regular products of the bottom, where the assets are invested in shares, funds raised through the FMPs are placed and credit money market instruments such as bank deposits, non-convertible bond and commercial paper, for example. A very small amount could be invested in equities.

FMPs mandate: are short-term management of products of one or two years. Few of FMPs is also extended to five years. FMPs are close ended funds, which means they are open for a certain period, during which you can invest and the output is a predetermined time.

Returns: Most companies do not disclose returns or mutual funds, where funds are deployed, because the Securities and Exchange Board of India (SEBI) regulations do not allow it. "But most products FMP provide returns that are at least 2-3 % higher than the rates of fixed deposit. So if the banks give an average of 9 % back now, you can expect around 11-12 % of PAF returns, "said Shekar M, President of India Finance Bazaar.com.

Suresh Sadagopan Ladder7 Financial Advisors, however, puts the gross proceeds from the PTF to a modest 9.6 to 8.9 %.

The companies also provide investors with an indicative yield is based on the amount of target that is set to invest in the system, which would give investors a view of the interest income from the investment.

The minimum investment amount: The minimum investment for these products generally R 5000. The purchase is usually in terms of units with a minimum price of 10 rupees in general. Most funds have no entry or exit load.

By investing in an FMP? You can invest in forest management plans at times when stock markets go wrong, or if the investor has no appetite for the risk of investing in the stock markets, said Shekar.

Who can invest in FMP? Bank fixed deposits rates (FDs), the value added to the income of the investor and then calculated tax outgo. But for the PAF with a term of more than a year, working the taxation of capital gains to be much lower than the framework decisions, making them a better solution. "Those who fall into the tax bracket higher than 30 % can invest in forest management plans. For those in the 10 % slice of the tax, it is better to be invested in bank framework decisions, "says Sadagopan.

What to look before you invest in FMP? Since the returns are not guaranteed, and most of the FMP products look the same, it can be difficult for investors to choose the correct FMP. "In this case, investors can look at past performance and fund managers to choose the best plan. In addition, most equity funds are the areas that will ensure a lower risk of capital loss," Shekar says.

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Since companies can not disclose where the funds were used, investors can also check the history of investment fund managers. "For instance, Birla Sun Life FMP funds was introduced first CDs (certificate of deposits). So if they come up with a new FMP, it can be assumed that could be invested in bank certificates of deposit, and to enable investors making a decision to invest in FMP, "Sadagopan points out.

Source: [mydigitalfc]