Mutual funds monthly income plans (MIP) assets fall 26% despite robust returns
Ashley Coutinho: Mumbai, Feb 21 2013, 10:35 IST
of the debt categories gave more than 9% returns in the year. “Most distributors were advising clients to move money from MIPs to duration and gilt funds,” said the fixed income head of a large fund house who did not want to be quoted. In 2012, gilt medium & long term funds gave average category returns of 10.5%, and Income funds gave returns of 9.8%.
The fixed income head added that duration products enjoy a cost advantage of 70-80 basis points over MIP schemes on a weighted average basis, which could have also influenced investors' decision. Short-term income funds typically charge between 0.5-1% as expense ratio, long term income funds charge 1.1-1.7% as expenses, while MIP schemes charge more than 2%.
Investors also moved their money into fixed deposits, tax-free bonds, company deposits, and retail NCDs which were giving returns of between 10-12% in 2012, according to experts.
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