NFO Review: ICICI Pru FMP Series 83 1113 days Plan EICICI Pru FMP Series 83 1113 days Plan E opened on 28th May and will close on 11th June, 2018. It is a fixed maturity plan (FMP) that has a tenure of 1113 days (roughly 3 years and 1 month). An FMP usually invests in debt that has approximately the same tenure as the FMP itself. Its ‘intended portfolio allocation’ specifies a focus on NCDs (Non-convertible debentures) rated A. The yield on the CRISIL A Short Term Bond Index was 10.88% as of June 1st 2018. The yield on the CRISIL A Medium to Long Term Bond Index was 10.32% as of June 1st 2018.

The fund, however, is benchmarked against the CRISIL Composite Bond Index which had a yield of 8.48% (as of 1st June 2018). Rahul Goswami and Rohan Maru, who manage various ICICI debt funds, will be the managers of this fund.

The intended portfolio allocation of the fund is as follows:

Sr No. Instrument Allocation
1. 80 – 100% in Debt instruments as follows
2. 0 – 20% in Money Market Instruments
Credit Allocation
1. 100% in NCDs rated A

Taxation

FMPs are treated as debt funds. Gains in them for holding periods of less than three years are taxed as Short Term Capital Gains (STCG). They are taxed as per your slab rate (which could be as high as 30%). Gains in FMPs for longer holding periods than three years are taxed as Long Term Capital Gains (LTCG). They are taxed at 20% along with the benefit of indexation.

Indexation takes inflation into account while computing taxable gains, thereby potentially reducing the effective tax rate. Some FMPs which commence in the last few months of a financial year, mature over four rather than three financial years, giving them an additional tax advantage. ICICI Pru FMP Series 83 1113 days Plan E which has a tenure of three years will not enjoy this additional advantage, given its launch date. You can also choose the dividend option but this will incur Dividend Distribution tax (DDT) which adds up to about 29% (including cess etc).

Key Details

Minimum Investment: Rs 5000

Tenure: 1113 days

Options: Growth, Dividend Payout and Dividend Transfer

NFO Period: 28th May to 11th June

Author
Neil Borate

Neil Borate is Deputy Editor, RupeeIQ. He can be contacted at neil@rupeeiq.com.