Apart from mutual fund schemes that invest just in debt and equity securities, there are some funds that invest in both these asset classes. Monthly income plans (MIPs) are one of those.
What is it about?
Although MIPs are debt-oriented funds, they invest up to 25% in equities. But not all MIPs can reach that limit. Some MIPs can invest up to 10%, some can do 15-20%, and few of them can invest up to 25%. For instance, HDFC Monthly Income Plan - Long Term Plan can invest up to 25% but UTI Monthly Income Scheme can invest only up to 15% in equities, as per Value Research. Called monthly income plans, these were originally meant to give out monthly dividends. But this is a misnomer because the Securities and Exchange Board of India (Sebi) prohibits mutual funds from assuring any income or dividends. Yet, the names continue.
