1. Since FMPs are closed-ended, you can only invest when it is launched as a new fund.
2. Decide your own investment horizon for a financial goal, as FMPs are of varying duration with a lock-in period, and you'll not have access to your money for this duration, despite their listing.
3. Opt for an FMP whose tenure matches your pre-decided investment term.
4. If you are risk-averse, go for a higher tenure, which will enable you to lock in at high yields for a long period.
5. Check underlying paper quality (to avoid default risk) by opting for AMCs that typically invest in highest quality instruments (AAA or AA rated corporate or PSU bonds).
6. Check that the underlying portfolio is investment grade, and also the sectors to which the portfolio is exposed.
7. While AMCs can't show indicative portfolio or yield, you can decide on the basis of past offerings.
8. Since underlying CDs (lower risk) and CPs (higher risk) of an FMP come with pre-defined interest rates, this aspect also gives a fair idea about return expected (called indicative yield), though not guaranteed.
9. If you're investing in FMPs of good AMCs, investment risk is reduced significantly, especially when bond market is extremely volatile and corporates are overstretched.
10. If you don’t need liquidity, FMPs are best option in terms of returns
2. Decide your own investment horizon for a financial goal, as FMPs are of varying duration with a lock-in period, and you'll not have access to your money for this duration, despite their listing.
3. Opt for an FMP whose tenure matches your pre-decided investment term.
4. If you are risk-averse, go for a higher tenure, which will enable you to lock in at high yields for a long period.
5. Check underlying paper quality (to avoid default risk) by opting for AMCs that typically invest in highest quality instruments (AAA or AA rated corporate or PSU bonds).
6. Check that the underlying portfolio is investment grade, and also the sectors to which the portfolio is exposed.
7. While AMCs can't show indicative portfolio or yield, you can decide on the basis of past offerings.
8. Since underlying CDs (lower risk) and CPs (higher risk) of an FMP come with pre-defined interest rates, this aspect also gives a fair idea about return expected (called indicative yield), though not guaranteed.
9. If you're investing in FMPs of good AMCs, investment risk is reduced significantly, especially when bond market is extremely volatile and corporates are overstretched.
10. If you don’t need liquidity, FMPs are best option in terms of returns