Monthly income plans lose 40% of corpus in 6 months

Mumbai, March 27 | Updated: Mar 28 2005, 05:37am hrs
Monthly Income Plans (MIPs) are clearly out of favour with mutual fund investors. This category of schemes has lost nearly 40% of its corpus in the last six months.

From Rs 9,634 crore in September 2004, the corpus of this category stands at Rs 6,003 crore (as per the latest available data as on February 28, 2005). In the month of February when the equity market witnessed a strong rally, this category has witnessed net redemptions of Rs 644 crore, since many investors booked profits in this category.

A whole host of MIPs flooded the MF space in the fag end of 2003, when fund houses marketed these schemes as the ideal choice for the debt fund regulars who wanted a slice of equity in their portfolios.

MIPs invest predominantly in debt instruments with a range of 10-25% in equities. However, they went out of favour in the last calendar year as the debt mart disappointed investors. Also, the fair bit of volatilty in this category took away the sheen from MIPs in general.

The average returns from this category of MF schemes have been very volatile. The category generated average returns of 12.55% in February as against a mere 1.31% during January. The returns generated by this category rose substantially in February 2005 as against the previous month. The underlying equity market was very bullish in February, resulting in a healthy performance by MIPs.

A scrutiny of the MIP category during the month of February shows that the exposure of MIP schemes to equity increased to 15.98% during February, compared to 15.87% in January. These schemes have been seen investing aggressively in equities due to the overall postive trend in the equity market.