Should you invest in DSP BlackRock's 3 Month FMP?

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Should you invest in DSP BlackRock's 3 Month FMP?
The Reserve Bank of India has again revised key policy rates for the 12th consecutive time since March 2010 to curb sticky inflation. During high interest rate scenario, Fixed Maturity Plans (FMPs) offered by various mutual fund houses are one of the attractive investment options.

FMPs are close-ended debt schemes that come with short-term tenor, typically three-months to a year which invests largely in Debt and Money Market Instruments like Treasury Bills, Commercial Deposits (CDs) and Commercial Papers (Cps), etc which matures on or before the maturity date of the scheme.

They benefit investors when the prevailing interest rates are high in the economy.

(Read, what is Money Market Instruments)

At present, the rate of 91-day T-bills is between 8-8.5% and Call Money Market rates are between 7-8.25%.

So, if you have spare cash lying in your bank account for short term, there is an option for you have an exposure to Fixed Maturity Plans. At the prevailing rates in the market, you can expect fair returns from your investment in FMP.

DSP BlackRock Mutual Fund is coming up with DSP BlackRock FMP - Series 13 - 3M.

This is a close-ended scheme with the duration of 3 months. The scheme seek to generate returns and capital appreciation by investing in a portfolio of debt and money market securities. The schemes will invest only in such securities which mature on or before the date of maturity of the scheme.

Basic Details:
NFO Opens: September 22, 2011
NFO Closes: September 26, 2011
NFO Price: Rs.10 per unit
Options: Growth and Dividend Payout option
Minimum Application Amount: Rs 5,000 per application and additional of Re 1, thereafter
Exit Load: Nil
Benchmark: CRISIL Liquid Fund Index
Listing: Bombay Stock Exchange
Fund Manager: Mr. Dhawal Dalal

View: Though, this fund can provide you fair returns considering high interest rates prevailing in our economy, but it is always advisable to consult an Investment Advisor.

Read more about: mutual funds, fmp, interest rate, rbi
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