Kotak FMP

What are Fixed Maturity Plans?

Fixed Maturity Plans are schemes offered by mutual funds that have a pre-specified tenure. The basic objective is to generate steady returns over a fixed duration.

Advantages of Fixed Maturity Plans

1 Low credit risk: FMPs normally invest in high credit rated fixed income instruments

2 Indexation Benefit: Indexation benefit helps in lowering capital gains so the tax outflow is lower. In certain scenarios by staying invested for little more than a year, the investor is able to get inflation indexation benefit for two financial years and can bring down his tax outflow substantially

Indexation benefit

Investing in FMPs at this time of the year gives you the benefit of indexation.

What is Indexation?

Under indexation, you are allowed by law to inflate the cost of your asset by a Gov.t notified inflation factor. This factor is the cost of inflation index. This index is used to artificially inflate the asset price. This helps to counter erosion of value in the price of an asset and bring the value of the asset at par with the prevailing market price.

Currently Available Options

AMC Name	Indicative Yield	Duration	Opening Date	Closing Date	Minimum Investment	Indexation
Kotak Mutual             Fund	9.45%*	370 Days	21-Jan-11	25-Jan-11	Rs. 5000	Single**

* The indicative yield is not a guarantee of returns. It is just an indicator of returns.

** If DTC is imposed in the next financial year, the indexation benefit will not be there. 

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