Monthly income plans (MIPs) are debt oriented hybrid funds. More than 75% of their portfolio is invested in fixed income securities, while 5 – 25% of the portfolio is invested in equities. These funds aim to generate income from the fixed income securities, with the equity kicker for long term capital appreciation. Further, these funds aim to distribute regular dividends to the investors. These funds are suitable for investors with low to moderate risk tolerance, who want regular income along with some capital appreciation. The average return of Monthly income Plans in 2014 was 25.3%, helped in a large part by strong equity performance in 2014. The chart below shows the annual returns of MIPs from 2012 to 2014.
