FMP review: IDFC Fixed Term Plan - Series 149 closes on June 1IDFC Fixed Term Plan – Series 149 is a fixed maturity plan (FMP) with a tenure of 1424 days or roughly 4 years. The fund opens for subscription on 30th May 2018 and will close on 1st June 2018. An FMP usually invests in debt that has approximately the same tenure as the FMP itself. The ‘intended portfolio allocation’ of this scheme is focused on AAA-rated NCDs (Non-convertible debentures). The yield on the CRISIL AAA rated NCDs, as per the fund’s Scheme Information Document (SID) was 8.20-8.35% as of April 30th, 2018.

Sr No. Instrument Allocation
1. 80 – 100% in Debt, including government securities
2. 0 – 20% in Money Market Instruments
Credit Allocation
1. 80-85% in AAA-rated NCDs
2. 15-20% in Government Securities

Source: SID

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. IDFC Fixed Term Plan Series 149 has not been launched at the end of the financial year but it has roughly a four-year tenure. 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: 1424 days or roughly 4 years

Options: Growth and Dividend

NFO Period: 30th May 2018 to 1st June 2018

Fund Manager: Anurag Mittal

Author
Neil Borate

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