Well, how about that!
I’m actually seeing a decrease in my FMP’s NAV. From 10.0000 to 9.9961!
I recently reinvested the proceeds from one of my matured Fixed Maturity Plans into another Fixed Maturity Plan of equivalent tenure but from a different fund house. A few days later, when I checked the NAV I found that it had dropped in value from 10.0000 to 9.9961. The change in absolute amount isn’t that significant but it’s quite strange because I’ve never seen this happen before (even with FMPs from the same fund house). Have you?
FYI, I tend to invest in FMPs that have a duration of around a year (366-days or 370-days).
Am trying to investigate the cause for this…
In the past one year, my Fixed Maturity Plans (FMPs) have fared only slightly better than my Bank Fixed Deposits (FDs) of comparable tenure.
- A 1-year FMP from IDFC achieved an APR of 10.05% (equal to an APY of 10.44% with quarterly compounding).
- A 1-year FMP from SBI achieved an APR of 9.89% (equal to an APY of 10.26% with quarterly compounding).
- A 1-year FD from HDFC Bank achieved an APR of 9.25% (equal to an APY of 9.58% with quarterly compounding).
Ignoring the complexities of investment timing and income tax, that’s less than a percentage point in difference! Have you seen anything different with your FMP and FD investments?
Here’s how you do the APR (simple interest) to APY (compound interest at a certain compounding interval) conversion.
If you’re totally lazy to the APR to APY conversion by hand, here’s a quick Android-application that I hacked. If you’re adventurous enough, you can download the .apk file and install it on your Android-phone as an unsigned application. Let me know if you run into any trouble — it should run fine on most Android environments.