I have just retired and want to invest to get an average return of 10% per annum, payable monthly with least risk. How do I do this? Please also suggest some FMPs with one- to three-month tenures.
- Harish Motwani
Fixed maturity plans (FMPs) are usually open for a handful of days only, so it is not possible to recommend names in advance. Moreover, with interest rates dwindling, you are better off with alternatives these days. Try bond and gilt funds instead. UTI Bond Fund, ICICI Prudential Income, Kotak Bond and Canara Robeco Income are some of the bond funds you can look at. ICICI Prudential GFIP, UTI Gilt Advantage Fund-LTP and DSP BlackRock G Sec Fund-Plan A are some of the better options in the gilt funds category. However, look at these funds only if you are game for some risk and have a time horizon of around one-two years.
You also said you would like to earn around 10% per annum. Remember that MFs are not allowed to guarantee returns or principal repayments. MFs are market-linked instruments and their fortunes go up and down depending on the movements of equity and debt markets. Stick to fixed deposits and small saving instruments if you want fixed and assured returns.
I want to lodge a complaint against the illegal termination of the UTI Senior Citizen’s Unit Plan (UTI-SCUP). Which authority should I approach? Also, I understand that UTI has not terminated all the schemes. How can it force me to redeem the units at the present NAV value?
- Prakash Kotak
Although the termination of UTI Senior Citizen’s Unit Plan upset the financial planning of all its investors, who were banking on the scheme despite the fund making an implied guarantee, it is difficult to call the termination illegal. The scheme had clearly mentioned in its offer document that “the scheme shall stand finally terminated at the discretion of the trust...” and “...when the trust decides to terminate the scheme, it will be binding on the members and they shall have no right to persuade the trust to continue the scheme”.
To put it simply, the fund wound up the scheme because it made a set of promises in another day and age; market conditions have changed dramatically thereafter and UTI MF simply couldn’t sustain its promises. When you invest in any MF scheme, you are expected to read the offer document carefully and are agree to its terms and conditions before handing them a cheque.
We understand your concern and sympathize with you. We aren’t sure whether taking legal action against UTI MF is the right step or not. You may want to consult a lawyer or a consumer rights activist for the legal course of action. You may complain to the market regulator, the Securities and Exchange Board of India (Sebi), but do not expect Sebi to take action here because apart from UTI’s inability to sustain the scheme, Sebi too wasn’t keen on the scheme’s continuance because it does not allow MFs to guarantee returns. SCUP had an implied guarantee despite falling under Sebi’s preview, and Sebi was not comfortable with this.
However, you could write to UTI MF’s chairman and let him know how you feel.