Aditya Birla Mutual Fund seeks to reset maturity of seven FMPs

Aditya Birla Sun Life (ABSL) Mutual Fund has proposed to reset the maturity date of seven of its fixed maturity plans (FMP) that are coming up for redemption in the coming financial year between April 5 and April 20.

These schemes collectively manage ₹2,800 crore as of February.

In a communication to investors, the fund house said, “Owing to the low yields at offer to investors, it would be prudent for existing investors to make maximum use of the indexation benefit and opt for extending their investments.”

For investors who give their consent, the maturity date will be extended by about 1.5 -2 years. The revised maturity date for each scheme is different and will be between October 2022 and April 2023. Investors who do not opt for resetting their maturity will get their money back, the fund house said.

Financial planners believe investors who have a time frame of two years could opt for this reset.

“If you exit and invest for only two years, you will not get indexation benefit on the fresh investment,” said Viral Bhatt, founder, Money Mantra. “Thus by staying invested, one can get the full advantage of indexation.”

With bond yields surging by 30 basis points since the start of the year, Bhatt expects investors to earn 5.5-6% over 1.5-2 years.

For investors with a time frame of more than five years, financial planners suggest withdrawing money from these FMPs. “If you have a 5-6 year time frame, you could opt for a target maturity fund or funds that have a rolldown portfolio,” said Vineet Nanda, founder of Sift Capital.