Top Performing Fixed Maturity Funds in 10 Years

The below table shows a list Of the Top Performing Fixed Maturity Funds in 10 Years Based on AUM, NAV and minimum SIP.

What Are Fixed Maturity Funds?

Fixed Maturity Funds, also known as Fixed Maturity Plans (FMPs), are close-ended debt mutual funds with a fixed tenure, typically ranging from 1 month to 5 years. These funds invest in fixed-income securities that mature in line with the fund’s maturity, aiming to provide relatively stable returns while minimizing interest rate risk.

FMPs invest in a portfolio of debt and money market instruments such as corporate bonds, government securities and commercial papers. The fund manager selects securities that mature around the same time as the FMP’s maturity date.

These funds are designed to provide returns that are indicative at the time of investment, although not guaranteed. They are suitable for investors looking for potentially higher returns than fixed deposits with a similar level of relative safety.

Features Of Top Performing Fixed Maturity Funds in 10 Years

The main features of top-performing Fixed Maturity Funds in 10 years include fixed tenure, close-ended structure, passive management, indicative yields and potential for tax efficiency. These funds offer a unique investment option for those seeking relatively stable returns over a specific time horizon.

Fixed tenure: FMPs have a predetermined maturity period, typically ranging from 1 month to 5 years, providing clarity on the investment duration.

Close-ended structure: These funds are only open for subscription during their initial offer period and are listed on stock exchanges for trading.

Passive management: FMPs follow a buy-and-hold strategy, with the portfolio largely remaining unchanged until maturity, reducing active management costs.

Indicative yields: While not guaranteed, FMPs provide an indication of potential returns at the time of investment, based on prevailing interest rates.

Best Performing Fixed Maturity Funds in 10 Years

The table below shows the Best Performing Fixed Maturity Funds in 10 Years Based on the lowest to highest expense ratio.

Top Performing Fixed Maturity Funds in 10 Years In India

The table below shows the Top Performing Fixed Maturity Funds in 10 Years In India Based on the Highest 3Y CAGR.

Top Performing Fixed Maturity Funds in 10 Years List

The table below shows the Top Performing Fixed Maturity Funds in 10 Years List based on exit load, i.e., the fee that the AMC charges investors when they exit or redeem their fund units.

Factors To Consider When Investing In Top Performing Fixed Maturity Funds in 10 Years

The main factors to consider when investing in top-performing Fixed-maturity funds in 10 years include tenure, credit quality, indicative yield, liquidity and alignment with your investment horizon. These factors can significantly impact the fund’s performance and suitability for your portfolio.

Tenure: Choose an FMP with a maturity period that aligns with your investment horizon. Premature exit can lead to lower returns and potential exit loads.

Credit quality: Assess the credit ratings of the underlying securities. Higher-rated instruments generally offer lower risk but may provide lower yields.

Indicative yield: Compare the indicative yields of different FMPs, but remember that these are not guaranteed returns.

Liquidity: Be aware of the limited liquidity of FMPs due to their close-ended nature. Ensure you won’t need the invested funds before maturity.

Tax implications: Understand the tax treatment of FMPs, considering your holding period and the indexation benefits for plans held for over three years.

How To Invest In Top Performing Fixed Maturity Funds in 10 Years?

To invest in top-performing Fixed Maturity Funds in 10 years, start by researching and comparing different FMPs based on their indicative yields, credit quality of underlying securities and fund house reputation. Once you’ve selected an FMP that aligns with your investment horizon and goals, you can invest through Alice Blue.

Alice Blue is a user-friendly online investment platform that provides tools and resources to help you make informed investment decisions. You can invest in FMPs during their New Fund Offer (NFO) period, which is typically open for a limited time.

Remember that FMPs are close-ended funds, so you can only invest during the NFO period. After that, units can be bought or sold on stock exchanges where they are listed. Ensure you’re comfortable with the lock-in period as premature exits may lead to lower returns.

Advantages Of Investing In Top Performing Fixed Maturity Funds in 10 Years?

The main advantages of investing in top-performing Fixed Maturity Funds in 10 years include the potential for stable returns, mitigation of interest rate risk, tax efficiency and portfolio diversification. These funds offer a unique investment option for those seeking relatively predictable returns over a specific time horizon.

Stable returns: FMPs aim to provide returns close to the indicative yield by holding securities until maturity, offering relative predictability of returns.

Interest rate risk mitigation: The buy-and-hold strategy helps minimize the impact of interest rate fluctuations on returns, especially when held to maturity.

Tax efficiency: FMPs held for over three years can benefit from indexation, potentially leading to more tax-efficient returns compared to traditional fixed deposits.

Diversification: These plans can add a layer of diversification to an investor’s portfolio, complementing other fixed-income and equity investments.

Risks Of Investing In Top Performing Fixed Maturity Funds in 10 Years?

The main risks of investing in top-performing Fixed Maturity Funds in 10 years include credit risk, liquidity risk, reinvestment risk and the potential for lower returns compared to open-ended debt funds. Investors should be aware of these factors before committing to an FMP.

Credit risk: There’s a risk that issuers of the underlying securities may default on their payments, which can impact the FMP’s returns.

Liquidity risk: FMPs are close-ended and have limited liquidity. Selling units on the stock exchange before maturity may result in lower returns.

Reinvestment risk: For longer-tenure FMPs, there’s a risk that interim cash flows may be reinvested at lower rates if interest rates decline.

Opportunity cost: If interest rates rise significantly after the FMP’s launch, investors may miss out on higher returns available in the market.

Importance of Fixed Maturity Funds

The main importance of Fixed Maturity Funds lies in their ability to offer relatively stable returns, mitigate interest rate risk, provide tax efficiency and serve as a complement to other investments. These funds play a crucial role for certain investors seeking predictable returns over a fixed period.

Stable returns: FMPs aim to provide relatively predictable returns by matching the maturity of underlying securities with the fund’s tenure.

Interest rate risk management: The buy-and-hold strategy of FMPs helps minimize the impact of interest rate fluctuations on returns.

Tax efficiency: For investments held over three years, FMPs can offer tax advantages through indexation benefits, potentially leading to better post-tax returns.

Portfolio diversification: FMPs can serve as a complementary investment to other fixed-income and equity investments, enhancing overall portfolio diversification.

How Long to Stay Invested in Fixed Maturity Funds?

The ideal investment duration for Fixed Maturity Funds is typically the entire tenure of the fund, which can range from 1 month to 5 years. Investors should aim to stay invested until maturity to benefit from the fund’s strategy of holding securities that align with the fund’s maturity date.

Exiting before maturity can lead to potential losses or lower returns, as FMPs are designed to be held for their full tenure. Additionally, staying invested for over three years can provide tax benefits through indexation. It’s crucial to choose an FMP with a maturity period that matches your investment horizon.

Tax Implications of Investing in Fixed Maturity Funds

Fixed Maturity Funds are taxed as debt mutual funds in India. For holding periods up to 3 years, gains are considered short-term capital gains and taxed at the investor’s income tax slab rate. For holding periods over 3 years, gains are treated as long-term capital gains.

Long-term capital gains from FMPs are taxed at 20% with indexation benefits. Indexation adjusts the purchase price for inflation, potentially reducing the tax liability. This tax treatment can make FMPs more tax-efficient for periods over 3 years compared to fixed deposits, especially for investors in higher tax brackets.

Future of Fixed Maturity Funds

The future of Fixed Maturity Funds in India looks promising, driven by factors such as the need for predictable returns, tax efficiency and alternatives to traditional fixed deposits. As investors become more aware of the benefits of FMPs, these funds are likely to remain an attractive option for those seeking stable returns over fixed periods.

However, their popularity may be influenced by interest rate trends, regulatory changes and the performance of other debt fund categories. The success of FMPs will depend on their ability to consistently deliver on their indicative yields and provide a tax-efficient alternative to other fixed-income investments.

Top Performing Fixed Maturity Funds in 10 Years FAQs   

Disclaimer: The above article is written for educational purposes and the companies’ data mentioned in the article may change with respect to time. The securities quoted are exemplary and are not recommendatory.