Fixed Maturity Plans (FMPs) are closed-ended debt funds with maturity of one month to five years.
• Fixed Maturity Plan generates regular income and / or capital appreciation by investing in wide range of debt and money market instruments.
• In Fixed Maturity Plan, each plan under the scheme will invest in a portfolio of securities normally having maturity duration in line with the maturity duration of the respective plan.
• They invest in debt instruments such as certificate of deposits, commercial paper and corporate debentures with a maturity coinciding with that of the fund.
• They usually invest in credit worthy instruments (AAA or equivalent rated).
• The objective is to lock into a certain rate of return on the assets at inception, thereby protecting the schemes against market fluctuations.
• FMPs can be described as the mutual fund industry's alternative to fixed deposits.
FMPs are a good investment vehicle for investors who are targeting a return on their investments over a fixed period of time and are indifferent to market volatility within that period.
Advantages of Investing in FMP
• Capital protection advantage: Less risk of capital loss than equity funds as investment is in debt and money market instruments.
• Tax advantage: Being a debt-based scheme, dividend are tax free in the hands of investors, mutual fund has to pay Dividend Distribution Tax (DDT), while bank Fixed Deposits interest is fully taxable in investor's hands.
• Double indexation: Hold an investment for a little more than one year but get the benefit of the index multiple of two years.
• Low interest rate sensitivity: As securities are held till maturity, FMPs are not affected by interest rate volatility.
Why Invest now in FMPs
• Uncertain interest rate scenarios, FMP are better investment option compared to Bank fixed deposits.
• In volatile markets FMPs give good returns with capital protection in shorter time horizons also.
• A hedge against Interest Rate Volatility.
• Good instrument as a portfolio diversifier.
Sunday, March 7, 2010
Tuesday, March 2, 2010
Recommended Infrastructure Fund - ICICI Prudential Infrastructure Fund (G
Recommended Infrastructure Fund - ICICI Prudential Infrastructure Fund (G)
Scheme Snapshot
Inception: 16 August 2005
Type: Open Ended Equity Fund
Corpus: Rs. 4182.89cr. (29-Jan-10)
Fund Manager: Shankar Naren
Benchmark Index: S&P CNX Nifty
Minimum Investment: Rs. 5000
Entry Load: Nil
Exit Load: Max 1.00 %
Latest NAV: Rs. 27.04 as on 25th Feb 2010
52 Week High: Rs 29.61 (07-Jan-10)
52 Week Low: Rs 15.1 (09-Mar-09)
Scheme Objective
To provide capital appreciation and income distribution to unit holders by investing predominantly in equity/equity related securities of the companies belonging to infrastructure development and the balance in debt securities and money market instruments including call money.
The scheme has 92% equity exposure & has 8% in Cash & Equivalent. It has highest sector exposure to Petroleum and Gas, Banking, Telecom, and Power sectors. The scheme has given consistent returns over a long term horizon. The Scheme has substantial exposure to Large, some exposure to Mid cap Stocks and has minimal exposure to small cap stocks creating a good balance of risk and returns.
· The fund manager has managed cash levels dynamically to make use of available opportunities in the markets.
· A positive Sharpe Ratio indicates high risk adjusted returns from the scheme.
· The scheme has one of the highest Jensen ratio indicating good stock selection ability of the fund manager.
· SIP of Rs.10000 monthly (Period March 09 to Feb 2010) has grown to Rs 130903 and a lump sum investment has grown to Rs.187669, showing the wealth creation ability of the fund.
Key Fund Analysis
· Market Cap Focus: Over the past one year the fund manager has kept high exposure to large cap stocks 62%, some exposure to mid caps 14% & marginal exposure to small caps 1%
· Sector Focus: Fund Manager has maintained high average exposure in sectors like Oil & Gas 18 %, Banks 14% and Telecom 8% over past 1 year.
· Company Focus: Fund Manager has maintained average exposure of 9.7% in Reliance Industries Ltd., 8% in Bharti Airtel Ltd. and 5% in NTPC Ltd. over last 1 year.
· Cash & Cash Equivalent: Average exposure of 14.5% over last 1 year.
Ideal for Investors
· Investment Horizon - Long Term
· Risk Appetite - High
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