Want regular dividends? Balanced funds may not be your best bet

MIPs and ultra short-term funds may be a better bet for such purposes

Has a mutual fund distributor tried to sell a balanced (equity-oriented hybrid) fund to you with the promise of a regular dividend each month? According to industry insiders, distributors are promising one per cent tax-free dividend each month (12 per cent a year) on these funds. While balanced funds are well suited for first-time investors in equities and for conservative investors, buying them to obtain a regular dividend would be a mistake.

Experts say that, technically, the promise of a one per cent dividend each month might not be false. "It is possible that a person who has invested Rs