A number of mutual funds both from the private and public sectors have lined up quite a few such schemes over the next few months. Some of them have gone on the defensive and are planning to launch index funds.

Among the funds launching these new schemes are Kotak Mahinndra Mutual Fund, Kothari Pionner, IL&FS, Birla Mutual, Bank of Baroda Mutual Fund and also the biggest of all, Unit Trust of India (UTI).

A total of 12 MFs have lined up either a fund for investment in govermment securities (gilt fund), a debt fund or a balanced fund.

With UTI finding success in its Monthly Income Plan (MIP) schemes, small funds like Cholamandalm Cazenove and Kothari Pioneer have follwed the trend. While others like Sundaram Mutual Fund, Escorts Mutual Fund and IDBI Principal have even gone more defensive with gilt funds. These funds are more safe than the others in the sense that the fund invests in government securities, providing steady returns with much more safety.

This is an interesting trend being witnessed in the Indian mutual fund industry as in the beginning of this year a number of funds launched schemes for investment in the emerging sectors like IT, Internet, media and telecom at a time when the stock prices of companies in these sectors were at their record high and the Sensex crossed the 6,000-mark.

But with the crash of the global markets, Indian markets also collapsed and most of these funds net asset value (NAV) now quote below their par value. Taking the vagaries from the past into account, Kothari Pioneer is planning to come out with an index fund with investments only in BSE Sensex or NSE Nifty companies.

Kotak Mahindra, meanwhile, is finding favour with the brick-and-mortar industires with its new fund - KM Old Economic Scheme. Earlier this year, the fund launched K-Tech fund for investment in ICE stocks.