The Hindu Business Line : Fund houses line up slew of FMP schemes

IT will soon rain fixed maturity plans for those who invest in mutual funds. A number of fund houses have mooted what are essentially close end schemes that will invest in debt securities.

The plans, none of which will guarantee returns, are being positioned by the asset management industry as ideal for conservative investors, especially those who wish to stay locked in for a pre-determined period.

Among those who have lined up fixed-term products are UTI MF, Tata MF and Standard Chartered MF, all of which have sent their offer documents to SEBI for approval.

Tata's Scheme: Tata MF's Fixed Horizon Fund has been presented as a `close ended pure debt scheme', one that will come with three different investment options. The first of these will have a tenure of 13 months, while that of the other two will be 18 months from the date of allotment.

Each plan (with the usual growth and dividend options) will be treated as fresh subscription during its launch, the offer document has mentioned, adding that dividends will be automatically reinvested.

UTI proposal: The Fixed Term Income Fund lined up by UTI MF will aim at providing stable returns through investments in a basket of fixed income paper usually maturing in line with the maturity periods of the plans. The latter have been named Plan 18, Plan 36 and Plan 60.

The asset allocation patterns for the first two are purely debt-oriented; the last one may take a limited 30 per cent exposure to equity and equity related instruments. The equity component of Plan 60, with Crisil MIP Blended Index as its benchmark, will concentrate on "companies with strong financials and quality management," it is pointed out.

UTI MF has proposed to launch the plans on a quarterly basis. Plan 18, for instance, will open on December 1, while Plan 36 will open on January 2. Each plan will have a fixed term with a separate portfolio.

StanChart Sweep: Standard Chartered MF has designed a plan that will `sweep' the balance of an account holder in a designated bank into a liquid fund.

The proposed Standard Chartered Sweep Account Plan will be positioned as an open ended liquid scheme, aimed at offering optimal returns and high liquidity through investing in debt and money market instruments.

The balance above a specified limit, which will be agreed to between the designated bank and its customers, will be transferred by the designated bank to the sweep account plan. The designated bank will be Standard Chartered Bank during the NFO period and till further notice, the offer document has stated.

An account holder's folio with the fund will be operated by the bank in respect of all his transactions under the scheme. The units will be created and redeemed in the name of such account holder.

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