The Hindu Business Line : MIPs — no more a major draw among investors

That the monthly-income tagline is no more a major draw is apparent from the fact that few fund houses are recording active sales , a trend corroborated by their distributors.

Both agree that the average MIP faces two stiff challenges - modest returns provided by its larger debt component and the generally mediocre show that its smaller equity portion has been turning in ever since the stock market started sliding.

A review of their one-year performance numbers reveal that well over 30 MIPs have provided single-digit returns , the average as worked out by Value Research being 7.53 per cent (as on July 18).

Considering their three-month show, the tally actually turns negative. In fact, on a three-month basis, even medium/long term gilt funds have done better than schemes in the monthly-income category. Also, for investors who have stayed for longer periods - two- and three-year terms - the average scores have not been impressive.

The decline on the equity front, which started in mid-May, is clearly a big factor, investment circles agree. They also allege that some of the funds in question had invested partly in mid- and small-cap stocks, many of which have suffered lately. The reference is to the 10-20 per cent equity component that MIP portfolios ordinarily have. In normaltimes, such an allocation is expected to act as a kicker, adding to whatever is being realised by the scheme's exposure to debt, it is pointed out.

The schemes that have topped the one-year league tables are HDFC MIP Long Term (13.37 per cent), UTI MIS Advantage Plan (11.74 per cent), LIC MD MIP (11.68 per cent), DSP Merrill Lynch Savings Plus Aggressive (11.51 per cent) and Reliance MIP (11.12 per cent). And occupying the lowest rungs are schemes such as Tata MIP, Tata MIP Plus (with higher equity allocation) and ING Vysya MIP Plan A. Each has delivered less than 5 per cent.