The Hindu Business Line : Select players active on fixed maturity domain

If you thought fund houses of all types have been active on the FMP (fixed maturity plan) front, think again. A few select players seem to be dominating this market, considering the sheer number of fixed-term products launched in recent months.

Birla, Templeton, HDFC, Kotak and newcomer Lotus are among those that have been working particularly hard at bringing out newer FMPs, a trend that is not quite matched by the likes of DSP Merrill Lynch, JM, DWS or Standard Chartered. While the latter, as well as a few others, have indeed made efforts, their frequency does not compare with those put in by the former group.

A look at data released by the Association of Mutual Funds in India (AMFI) indicates the recurrence of such names as Birla Sun Life MF in the close-ended income funds’ domain. Some of the others that have been fairly active here are ICICI Prudential, Sundaram BNP Paribas and ING. Fund houses that are almost conspicuous by their absence — taking into account the past few months’ data — include biggies such as Reliance and UTI. Also, nearly missing from the scene are smaller outfits such as Sahara and Taurus.

While some sections in the funds industry suggest that FMPs are merely a side issue of sorts, not constituting a substantial part of the whole, others feel that these indeed have their merits, especially when longer term income funds are not acceptable. In fact, distributors suggest that these products have emerged as an important category, considering the money they have come to manage.

As AMFI data indicate, June was a very active month, with a large number of product launches. Those particularly involved included Birla (FTP - Quarterly Series 17, FTP - Quarterly Series 18, FTP - Quarterly Series 19 and FTP - 24 months), Kotak (FMP three month Series 19, FMP 3M Series 20, FMP 3M Series 21, FMP 3M Series 22 and FMP 12M Series 1), Lotus India (FMP - three months - Series X, FMP - 375 days - Series I, FMP - three months - Series XI and FMP - one month - Series I) and Sundaram BNP Paribas (FTP Series XXVIII, FTP Series XXVII, FTP Series XXIX, FTP Series XXX and FTP Series XXXI). This list will also include HDFC and Tata.

One-off cases included Canbank MF (Canfixed Maturity Plan 1 M), DSP Merrill Lynch (FTP - Series 1), ICICI Prudential (FMP - Series 38 - Three Months Plan D), HSBC (Fixed Term Series 30), LIC MF (FMP Series 26) and Franklin Templeton (Fixed Horizon Fund Series II Plan B).

Sources point out that FMPs are relatively easy to roll out, requiring little effort on the part of the fund houses concerned. Typically, additional plans are introduced under each series, depending on market conditions.

Among the most recent filings with the SEBI are Sundaram BNP Paribas Fixed Term Plan – 90 Day Series – Plan 1-3 and Lotus India Fixed Maturity Plan – three Months – Series XXI—XXVI.

Yields settle down

Indicative yields are seen to be stabilising in the universe of FMPs, with the latest 90-day products offering yields of roughly 8-8.2 per cent. A case in point is the most recent offering by SBI MF —a 90-day FMP carrying a P1+f rating from Crisil. Sources with distribution firms say the FMP, which will mature in the second week of December, has an indicative yield of 8.1 per cent.

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