Not every scheme with a roll-down strategy is an FMP2 min read . Updated: 03 May 2022, 06:19 AM IST
- Unlike funds following roll-down strategy, target maturity funds’ portfolio is defined
Post a string of defaults by some big companies in 2018-’19, investors were averse to locking in money in fixed income. Hence, the popularity of FMPs (Fixed Maturity Plans) waned somewhat as people preferred open-ended funds as they could exit if there were indications of downgrade/default in a particular underlying paper. This was the period when many funds started following a rolldown strategy on the open-ended funds’ platform. The funds where these strategies were applied were already part of categories defined by the market regulator Sebi andinclude corporate bonds, banking & PSU debt, dynamic bonds. These roll-down strategies were often branded and sold by distributors as “open-ended Fixed Maturity Plans".