IDBI is going to come up with a new MIP (Monthly Income Plan), and the NFO is going to be open from February 14th to February 28th 2011. The scheme will then reopen on 14th March 2011.
As I’ve written earlier MIPs intend to provide you with a monthly income but there are no guarantees, and the IDBI MIP is no exception to that.
There is a growth and a dividend option available in this MIP, and within the dividend option you can choose to get paid the dividend monthly or quarterly.
IDBI MIP will invest 80% – 100% in debt instruments and the remainder in the shares of the Nifty and Nifty Junior Index. The minimum investment needed in IDBI MIP is Rs. 5,000 and then there is the option of SIP as well.
I don’t quite understand why people do a SIP on an instrument whose whole premise is paying out monthly incomes, but I got a few comments asking about this option in my last post, so I guess there are some people who see merit in it.
The expenses are estimated to be 2.25% of net assets, and there is an exit load of 1% if you redeem within a year.
A look at my earlier MIP in India post shows me that there are as many as 18 Monthly Income Plans in India right now, so this fund is being launched in a category where there are quite a few funds already.
The look at the returns show that they range from 5.85% to 13% annualized, which is quite a big range, but then this is for all MIP funds and how they did in the past.
As I said earlier – to me it makes sense to avoid NFOs if there are mutual funds already in that category, and invest in the fund only when it has shown a good performance record, and this fund falls under that category as well.