Friday, 21 January 2011

Monthly Income Plan (MIP) a Debt Oriented Mutual Fund

Monthly Income Plan or MIP is a type of Mutual fund which distributes the profit monthly in the form of dividends to unit holders. As the case of other mutual funds monthly income plan also invest the pooled money of unit holders in financial instruments and equity shares. But a greater portion of money (75- 100%) will be invested in secured investments such as debt and money market instruments and only a small portion of money (0-25%) will be invested in equity shares.

Even if the Monthly Income Plan gives out regular dividend we could not assure a guaranteed amount of return as it is a mutual fund investing in other financial instruments including equity shares and the return may be vary as per the performance of the Fund and also as per the market trend. The fund value may be less or high than our capital amount and we could not guarantee the amount invested also. But the Monthly Income Plan managed by a good fund manager may give good return than any other monthly income investments such as fixed deposits or Post office Monthly Income Plan. When the market trend is bullish the equity investment of MIP provides additional income.

Who can invest in Monthly Income Plan?

The investors,

those who can play with a large amount of money,

those who wish to get return with regular intervals,

those who wish to try a small portion of money in equity market,

those who can bear a small amount of risk with their investments,

those who have no any other source of monthly income and

those who are near to retire from their employment,

can invest in Monthly Income Plan.

Features of Monthly Income Plan



You have to pay for an exit load if you redeem it within a year. IF you are not ready to bear the exit load, hold the fund at least for more than one year.

There may be an adverse return also for a Monthly Income Plan especially for a short period, so keep the MIP for a long period, if you expect a positive return.

The monthly return from the MIP is in the form of dividend and as per the current tax rule there is no tax or TDS for this dividend income but the there is a dividend distribution tax and this will be affected the Net Asset Value (NAV) of the MIP. There is a capital gain tax also in the hands of the investor as per the time period of holding the MIP. (If you redeem before one year there will be short term capital gain and more than one year there will be long term capital gain)

The Monthly income plan does not guarantee the monthly income. The fund managers will try their level best to give out monthly dividends. If the fund is not performing well due to various reasons they cannot provide you a monthly outcome.

You can compare only with debt funds or fixed deposits, because it is a debt fund in nature and deposit a large portion of money in debt schemes, Money Market instruments, gold etc. and only a small portion of money in equities. So you can compare the scheme only with other debt funds, not with equity funds.

Following are the list of Monthly Income Plans in India

Bharti AXA Regular Return Fund

Birla Sunlife MIP

Canara Robeco MIP

Franklin Templeton India Monthly Income Plan

HDFC MF Monthly Income Plan

HSBC MIP

ICICI Prudential Monthly Income Plan

ING MIP Fund

Kotak Income Plus

Principal Monthly Income Plan

Reliance Monthly Income Plan

Religare MIP

Religare MIP Plus

SBI Magnum Monthly Income Plan

Sundaram Monthly Income Plan

Tata MIP Plus

Taurus MIP Advantage Fund

UTI MIS Fund

If you wish to get a regular income and also ready to bear a slight chance or risk go for monthly Income plan. When you invest in any MIP, read well about the plan and related matters before investing.
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2 comments :

  1. Really a nice blog! Just came across this today and will going to check for updates.

    ReplyDelete