Monthly Income Plans Outdo Bank Returns
Returns from monthly income plans (MIPs) in the last three months have beaten the bank saving deposit rate hands down, and are giving one-year fixed deposits a run for their money.
A quick Business Standard Research Bureau (BSRB) study shows that 17 MIPs, studied here out of the total universe of 21 MIPs offered by private funds, have appreciated between 6.32 per cent and 22.92 per cent on an annualised basis. Seven schemes have posted annualised returns of over 14.72 per cent.
Buoyed by hefty returns, these MIPs have been flooded with investment enquiries and have seen between 30 per cent and 50 per cent growth in assets under management.
The Alliance MIP (monthly dividend), FT India MIP (quarterly dividend), DSPML Savings Plus Fund (monthly dividend), Birla MIP Payment, SBI Magnum MIP (monthly dividend) have been favoured by the investing fraternity.
The Alliance MIP is the topper, with a three-month return of 5.73 per cent (annualised) followed by the FT India MIP (5.55 per cent) and DSPML Savings Plus fund (5.11 per cent) These open-ended income schemes have been able to post handsome returns by packing their portfolios with quality debt securities, and topped with a prudent amount of equities.
As a result, the MIPs' returns exceeded the average 2.3 per cent returns posted by pure debt schemes in the same period.
S Naganath, chief investment officer and joint president, DSP Merrill Lynch Fund Managers, which manages the DSP Merrill Lynch Savings Plus Fund said: "A judicious mix of debt and equity, and the timing of the investment in the equity portfolio, have translated into impressive performance. Clearly, the fundamentals of the corporate sector are looking good and the upside of the current rally may benefit those investors who are invested in a mixture of debt and equity schemes."
DSP Merrill Lynch Savings Plus Fund's exposure to equities in April 2003 was only 6.45 per cent of the total assets of Rs 25.53 crore, with investment in select companies like L&T, HPCL, Grasim Industries, ITC, GAIL, Dr Reddy's and Glaxo SmithKline.
Over the last two months, the scheme has grown almost 40 per cent to Rs 35.21 crore.